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FEMA - Case Laws
Showing 421 to 440 of 1378 Records
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2015 (2) TMI 415
Contravention of the provisions of Section 9(1)(b), 9(1)(d) and Section 64(2) r/w Section 9(1)(d) of Foreign Exchange Regulation Act, 1973 - Imposition of personal penalty - violation under Section 51 of FERA, 1973 - whether the adjudicating authority has given the appellant an opportunity of cross-examining the mahazar witnesses and the person who recorded the voluntary statement of the appellant - Held that:- Sh. Kiran S. Javali, Counsel for the appellant chose not to pursue the cross-examination but preferred the case to be decided on the written submission he proposed to make and requested the Adjudicating Authority to conduct the proceedings on the basis of facts and evidence on record. Sh. Kiran S. Javali, Counsel for the appellant filed his written submission on 19-10-2010 which is taken into record. Therefore, I am of the view that appellant by choosing not to proceed with cross-examination of witnesses has himself given a go by to the direction of the Hon’ble High Court. Even his written submission is bereft of the demand of cross-examination and, it appears, he had no dispute at all about the issue of cross-examination of witnesses. For the reasons stated herein, the question of cross-examination does not arise and the adjudication order now is not vitiated for want of opportunity to cross-examine the witnesses.
Whether the Adjudicating Authority is justified in re-adjudicating the case to the extent that was already decided by this Tribunal by Order dated 19-7-2002. - Held that:- remitting back the case to the Adjudicating Authority by the Hon’ble High Court of Karnataka was for conducting a fresh enquiry into the allegation as made in the SCN and adjudicating the case according to law. The word “fresh enquiry” in this case means conducting the adjudicating proceedings over again setting aside the earlier Adjudication Order. When the fresh enquiry led to passing of the present Adjudication Order which replaced the earlier Adjudication Order, this Tribunal’s Order dated 19-7-2002 passed in Appeal No. 779/1993 against earlier Adjudication Order is non-existent in the eyes of law. Therefore, exoneration of the appellant of charges under Section 9(1)(b) & (d) of FERA, 1973 under this Tribunal’s earlier Order dated 19-7-2002 stands disallowed at the threshold and that Order no more subsists.
Appellant’s dispute was only with the drawal of Panchnama in the office of the DRI consequent to the search of the appellant and his scooter. The appellant was apprehended at about 2115 hours of 6-1-1989 near Sawarkar Baba Pai Petrol Pump, Mangalore. It is evident from a bare perusal of the Panchnama and cross-examination of Sh. Gangadharan, Assistant Enforcement Officer that there was a prior intelligence on the movement of the appellant on or about 2100 hrs. at the spot where he was apprehended and he would be having at his person certain amounts which was meant for distribution in violation of the provisions of the Act. Since it was very late in the night, considering the safety and security of the appellant he was taken to the office of DRI for the search of his person and the scooter for which witnesses were called to the office and a thorough search resulted in seizure of ₹ 8.50 lacs wrapped in newspaper sheets kept in gunny bag in the leg space of his scooter and of documents in 2 sheets recovery of which has not been disputed by the appellant. Therefore, I also concur with the finding of the ld. Adjudicating Authority that the conduct of the search at the office of DRI at Mangalore by the officers of Enforcement Directorate and DRI does not impair the adjudication proceedings.
Appellant miserably failed to prove the source of ₹ 8.50 lacs when he claims that the amount of ₹ 8.5 lacs alleged to have been seized from him actually belongs to him. He has not produced any document to prove the source of income. I find that the statement is only an explanation to the seizure of ₹ 8.5 lacs and documents. Sheet No. 1 lists date wise receipts of the amount of ₹ 57,00,000/- in 14 occasions whereas Sheet No. 2 shows payments of ₹ 48.50 lacs made to Sh. Abdul Basith Kadli in 13 occasions. The entire case against the appellant is made out from the explanation contained in the statement to the seizure. The fact of receiving and making payments as evident from the recovery and seizure has not been disputed by the appellant.
As regards the criminal complaint initiated by the respondent under Section 56 of FERA, 1973, the appellant submitted that the complaint was supported with the same set of evidence that have been relied upon in the adjudication proceedings. Since the complaint was discharged exonerating the appellant of criminal prosecution and the respondent had not challenged the Order of exoneration, the impugned order passed in pursuance of the SCN supported by the same set of evidence is liable to be quashed and set aside.
As regards the penalty, the Adjudicating authority is vested with power to impose penalties under Section 50 not exceeding five times the amount or value involved in any contravention. I am, therefore, of the view that the penalties imposed on the appellant are commensurate with the quantum of amounts involved in the contravention. - Reason to interfere in the impugned order in so far as it relates to the levy of penalties of ₹ 5,70,000/-, ₹ 4,80,000/- & ₹ 8,50,000/- on the appellant respectively for contravention of Section 9(1)(b), 9(1)(d) & 9(1)(d) r/w Section 64(2) of FERA, 1973 and also to the confiscation of ₹ 8.50 lacs under Section 63 of the Act. - Decided against assessee.
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2015 (2) TMI 374
Seizure of currency - cash balance found from factory premises - Held that:- Currency notes constitute property of the petitioner within the meaning of Article 300A of the Constitution of India. No person can be deprived of his property save by authority of Law. There is no explanation at all as to the circumstances in which the property of the petitioner has been seized. - writ application is disposed of by directing the respondents-authorities to return the cash seized on February 22, 2011 along with interest that has accrued on the aforesaid sum of ₹ 10,00,000/- to the petitioner within a fortnight from the date of communication of this order. - Decided in favour of petitioner.
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2015 (2) TMI 334
Proceedings for forfeiture of her property under SAFEMA - Removal of superstructure of property - Forfeiture of property - Ownership of property - Society opposed request of CGOVT for entering its property in its name that a member of the Society is only the owner of the superstructure, the ownership of the land always remains with the Society, and further that in view of Section 22 of the Gujarat Cooperative Society Act, the Central Government cannot be a member of the Cooperative Society - Held that:- Central Government obviously be interested in liquidating the property by selling the property and to recover the sale proceeds. On the other hand, the Society has in the said affidavit in-rejoinder as well as through the counsel before the Court made it clear that if any individual member applies for membership of the society, who is otherwise qualified under the byelaws and agrees to abide by the byelaws of the society, the society would have no objection, subject to clearance of legal dues of the Society, to make him a member of the society, and transferring the plot in his name. - It would be open for the respondents and particularly, Respondent No.1 to identify the intending purchaser of the plot in question by assuring highest possible price to the Central Government through such means as may be permissible. - The Society shall make such purchaser its member and transfer the plot in question in his or her name, of course subject to clearance of all the legal dues of the society and payment of such transfer charges as may be permissible under the law. - Petition disposed of.
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2015 (2) TMI 296
Condonation of delay - Held that:- A perusal of the averments made in the application moved by the appellant seeking condonation of delay in filing the appeal goes to show that the averments made in the application reflects that the explanation is wholly inadequate and unsatisfactory - Under Section 35 of FEMA, appeal against the decision or order of the Appellate Tribunal may be filed in the High Court within sixty days from the date of communication of the decision or order of the Appellate Tribunal on any question of law arising out of such order. Proviso to Section 35 of FEMA makes it clear that the High Court if satisfied that the appellant was prevented by sufficient cause from filing the appeal within 60 days, may allow it to be filed within a further period not exceeding sixty days. Thus, under Section 35 of FEMA, appeal against the decision or order of the Appellate Tribunal would lie before the High Court provided the appeal is filed within a period of 60 days, extendable by a further period not exceeding 60 days, if the High Court is satisfied that sufficient cause prevented the filing of the appeal within the prescribed period. To put it simply, any appeal filed before the High Court under Section 35 of FEMA beyond 120 days would be time barred.
Admittedly, appeal has been filed after considerable long lapse of time i.e. 352 days. Even if it is assumed that certified copy of the impugned order dated 2.3.2009 was received on 31.3.2009 by the appellant and that period has to be excluded from consideration even then, there is a delay of more than 120 days, which cannot be condoned. - Condonation denied.
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2015 (2) TMI 260
Quashment of the detention order passed under Section 3(1) (i) & 3 (1) (iii) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 against Mr. Rameshwar Sharma (detenue), the petitioner’s husband, and a direction to set at liberty the detenue from detention - Held that:- In the matter at hand, after the alleged seizure of red sanders from possession and custody of the detenue on 28/29.09.2013, and conduct of investigation, the complaint was filed under Section 132 and 135 of the Customs Act on 28.11.2013. Thus, the investigation was complete by the said date. Further, the show cause notice under the Customs Act was issued to the detenue on 24.03.2014, which clearly establishes that the material evidence required for passing of the detention order was available with the Detaining Authority. However, inspite of the same, the detention order was not passed till 25.07.2014. The detention order was passed after a delay of about 8 months, which has defeated the purpose of the detention as it was to prevent the detenue from acting in a prejudicial manner by indulging in the prohibited trade. Thus, the live link had already broken by the time the detention order was passed belatedly on 25.07.2014. There is no satisfactory or convincing explanation brought on record by the respondents to explain the aforesaid delay.
It is evident from the facts of the case that the detenue informed the sponsoring authority about his illness, and that he was confined to his bed on 05.08.2014 and, thereafter, made regular correspondence with the sponsoring authority. Again, he personally appeared before the Sponsoring Authority on 14.08.2014. The above circumstances clearly establish the availability of the detenue at his residence and on one occasion, even before the Sponsoring Authority. Despite this the detention order was not served upon the detenue. The respondents have not disclosed any attempt made to serve the detention order soon after it had been made. It is not the respondents case that the detenue was avoiding service of the detention order. - Detention order quashed - Decided in favour of appellant.
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2015 (2) TMI 217
Waiver of pre deposit - Appeal dismissed for want of satisfying the predeposit requirement - Held that:- though as per subsection( 1) of section 15, an appeal against an order of penalty or redemption charges should ordinarily be accompanied by payment of such amounts, it is within the power of the appellate authority to waive fully or in part such requirement either unconditionally or subject to conditions if it is found that such deposit would cause undue hardship to the appellant. - Under the circumstances, when the petitioner had made such an application making specific request for waiver of predeposit requirement, the appeal could not have been dismissed on the ground that the appellant did not fulfill such predeposit requirement. It was expected in law of the appellate authority to first decide such an application even if the application was rejected by the appellate authority refusing to waive predeposit requirement or same was waived on some condition, the appellate authority had to give reasonable time to the appellant to either make full predeposit or to fulfill the condition that may have been imposed in such order. In any case, dismissal of the appeal for want of predeposit without disposing of the petitioner’s application for waiver thereof was simply not permissible. - Impugned order stands quashed - Decided in favour of appellants.
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2015 (2) TMI 174
Violations of Sections 9 (1) (a), 19 (1) (d) as well as 29 (1) (b) read with Section 68 FERA - Held that:- although the AO was passed on 15th October 1990, the order passed by the AT staying recovery of the penalty amount was not passed till 26th May 1995. Then again admittedly the stay order was not formally communicated to the parties. Although the ED appears to have not taken steps to recover the penalties during this entire period, it woke up on 27th December 1999 i.e. more than 9 years after the AO sanctioned the recovery of the penalty amount. At this time, the Petitioners were under a bona fide belief that the recovery of penalties had been stayed by the AT on 26th May 1995. This was also conveyed to the ED.
If despite adjudication order attaining finality no payment is made of the penalty amount then certainly it could be said that Section 57 FERA is attracted. Here, however, with there being definitely a clear stay order passed on 8th July 2002, there was no justification for the learned ACMM to have proceeded to frame notice on 17th May 2003 against the Petitioners for the offence under Section 57 FERA. It is possible that on the date of taking cognizance of the offence on 23rd April 2002, the ACMM may have been justified in proceeding with the order since the formal order of stay was not yet passed but certainly once that order was passed further proceedings ought not to have been continued.
In any event, with the subsequent developments there appears to be no purpose served in keeping the proceedings under Section 57 FERA alive. It is urged by learned counsel for the Respondents that the matters could be sent back to the learned ACMM for appropriate orders to be passed in light of the subsequent developments. The Court sees no purpose being served in doing that except that it would delay the proceedings even further. - there is no ground made out for continuing the proceedings under Section 57 FERA qua the Petitioners. - Decided in favour of assessee.
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2015 (2) TMI 124
Validity of detention order - Forfeiture of property under SAFEMA - Detention notice not served - Violation of principle of natural justice - Held that:- Shri Sarin was never served with the detention order, nor even made aware of it ever, during the time it was in force. The respondents were unable to show any material to say that they tried to serve it upon him, and that he could have in any manner known of its existence, in order to challenge it. In these circumstances, it was impossible for him to impugn it, for the period July 1975 to March 1977. Once the Emergency was revoked, and the detention order suffered a similar fate, there was no manner for him again to challenge the detention order as it had no consequence. Another very important aspect is that when the Emergency was in force, individuals whose personal liberty was forfeited under preventive detention laws, such as COFEPOSA, were, by reason of the Proclamation of Emergency, prevented from asserting their Fundamental Rights. Initially nine High Courts held that notwithstanding this position, orders of detention could be challenged under Article 226 of the Constitution of India. However, the Supreme Court held that such petitions were not maintainable; effectively barring even the writ remedy to those aggrieved against detention orders, in A.D.M. Jabalpur v Shiv Kant Shukla [1976 (4) TMI 211 - SUPREME COURT].
The submission of the respondents that the revocation order in the present case was not under Section 12-A, but under Section 11 is of not much consequence. The only power of revocation which could have been sought recourse to, by the Central Government, under COFEPOSA, during Emergency, in respect of orders under Section 12-A, was under Section 12-A (3) after review and recommendation to release the detenu. That class of detention orders too stood excluded by virtue of Section 2 (2) (b) third proviso; however, the first category, i.e. those detention orders that had not been revoked before cessation of Emergency, could have been revoked only under Section 11 of COFEPOSA. - revocation of the detention order, in the present case, clearly fell within third proviso to Section 2 (2) (b) and was thus excluded from exercise of jurisdiction under SAFEMA. The writ petition has to consequently succeed; the orders of the competent and appellate authority are hereby quashed. - Decided in favour of appellant.
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2015 (2) TMI 24
Contravention of Sections 18(2) and 18(3) read with Section 68 of the Foreign Exchange Regulation Act, 1973 - Imposition of penalty - whether each of them to whom notices were issued, were during the relevant period “in charge of and responsible to the said company for the conduct of the day-to-day business of the company”. - Held that:- ED has not been able to deny that the SCN was served on FIL and its directors, including the Appellant only at the address of the company and at the time when the Appellant had ceased to be a director. It is not the case of the ED that even after coming to know, when the appeal was filed by the Appellant, that he had ceased to be a director of FIL with effect from 31st October 2001, it offered to serve him a separate SCN at his address. Consequently, it is evident that no SCN was in fact served upon the Appellant at his address as on the date of the SCN, i.e., 28th May 2002.
The ED ought to have fairly stated before the AT that since no SCN had been served on the Appellant at his ordinary place of his residence, the AO qua him should in fact be set aside and the ED should be permitted to serve a separate SCN on him. However, even before this Court it was repeatedly asserted that as far as the ED was concerned, it had served the SCN on the Appellant through FIL. Therefore the Court is constrained to observe that the fundamental requirement of the Adjudication Proceedings and Appeal Rules, 1974 (“APAR”) (1974 Rules) and in particular Rule 10 (reproduced herein below) has not been satisfied in the present case.
In terms of Rule 10(b), service of notice had to be on either the address of his place of residence or his last known place of residence or the place where he carries on, or last carried on, business or personally works or last worked for gain. There can be no doubt that as on 28th May 2002, i.e., the date of the SCN, it had to be served either at the place of residence of the Appellant or the last known place of his work. As on that date, his address was not the address of FIL. - Even after coming to know that as on the date of the issuance of the SCN, the Appellant was no longer a director of FIL and therefore the notice issued to him at the address of FIL could not obviously be treated to have been served upon him, the ED was not prepared to say that the AO qua him must be set aside on that ground.
The AT failed to deal with the central point in the appeal filed by the Appellant. It has also failed to note his submissions in that regard. - The occasion for the Appellant to avail of the defence available to him under Section 68(1) FERA, i.e., to show that he was not in charge of the day-to-day affairs of the company or that the infraction complained of had not occurred with his knowledge or that he had exercised due diligence to avoid such contravention would arise only after he was served with the SCN along with the documents relied upon against him by the ED. In this case, the documents include the statement of Mr. Pradeep Verma. It is not the case of the ED that even on the date of the AO, it had actually served on the Appellant, the documents relied upon in the SCN. Consequently, it is not open to the ED to now contend that even without the relied upon documents being served on the Appellant, he should somehow have made out his case before the AT in support of his defence under the proviso to Section 68 (1) FERA. The impugned AO was in violation of the principles of natural justice, as well as the requirement of Section 51 FEMA read with Rule 10 of the APPR. - impugned AO dated 3rd November 2004 and the impugned order dated 2nd July 2008 of the AT are unsustainable in law and are hereby set aside. - Decided in favour of appellant.
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2015 (1) TMI 1170
Foreign exchange allocated against the license having not been utilized - Waiver of pre deposit - Imposition of penalty - Held that:- Under the statutory scheme the appellants are under an obligation to file appeal simultaneously along with penalty amount unless and until dispensation is granted under Second proviso to Section 52 (2) on the application of the appellants after getting satisfied about the prima facie good case and undue hardship of the appellants. In the instant case, the appellate has not taken care to comply the judicial order despite sufficient indulgence shown by this Tribunal by granting 50% dispensation in favour of the appellant which shows lack of bonafide on the part of the appellant. The order was passed long back on 12.02.04 where the appellant has shown total defiance towards judicial order where equity does not lie in his favour. Looking towards this situation this appeal is liable to be dismissed.
Written submissions stated to be filed by the Petitioner on 15th September, 2009 are not on record of the Tribunal. However, in view of the endorsement even if it is accepted that the written submissions in para-7 submitted that without prejudice to the submissions the Petitioner herein prayed for time of two months to comply with the order dated 12th February, 2004, the same would not enure to the benefit of the Petitioner in as much as this alternate submission of depositing the amount was not taken when the application for withdrawal of the direction of pre-deposit was being considered. - Decided against Assessee.
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2015 (1) TMI 1122
Contravention of Section 8(3) and 8(4) read with Section 68 of FEMA read with para-7A, 20(i) of Exchange Control Manual, 1995 (ECM) - Held that:- Impugned order of the appellate tribunal and the order-in-original suffer from serious infractions of the principles of natural justice and, even on merits, it appears that the appellants were able to provide sufficient material on record to raise a serious doubt about the alleged violation of FEMA. - In the present case, the order in original, as noticed above, is primarily founded upon the response dated 03.02.2004 received from Bank of India by the ED to its communication of 08.01.2004. It is not clear as to what is the nature and content of the information elicited by the ED from the Bank of India in its communication of 08.01.2004. It also remains in suspense as to what was the nature and content of the response sent by Bank of India in its communication dated 03.02.2004. It is not clear as to who sent the said alleged communication - i.e. whether it was sent by an authorized officer of the Bank or not.
The appellants should have then approached the Bank of India and enquired about the same. This argument has only to be stated, to be rejected. Pertinently, when the appellant company demanded copies of the said communications vide their letter dated 29.03.2004, the same were not provided. Without having copies of the said communication, this Court fails to appreciate as to how the appellants could be expected to gather any information from the said Bank, or get them verified. In fact, the appellants were not even obliged to do so, and it was the primary obligation of the adjudicating authority to place all incriminating material - which was intended to be relied upon to condemn the appellants and penalize them in a quasi-criminal proceedings, before the appellants to elicit their response. The order imposing penalty is undoubtedly a prejudicial order as it entails quasi criminal and penal consequences. No such order could have been passed behind the back of the appellants, without confronting them with all the material which was sought to be relied upon and granting adequate opportunity to them to deal with the same. It was obligatory for the adjudicating authority to thereafter consider the response of the appellants, if any, and after consideration of the entire matter, pass the adjudication order.
Reasoning adopted by the Appellate Tribunal in para 19 borders of perversity, when it observes that the appellant company had not approached the Bank of India to seek clarification about the said letter dated 03.02.2004. Pertinently, it appears that the Appellate Tribunal also did not even consider it necessary to go through the said correspondences dated 08.01.2004 and 03.02.2004 between the ED and the Bank of India. The Appellate Tribunal did not consider it necessary to satisfy itself as to the nature of information sought from, and provided by the Bank of India. On this short ground, the order in original and the impugned order of the Appellate Tribunal are liable to be quashed and set aside.
Respondents have not established the violation of provisions of FEMA as alleged against the respondent beyond all reasonable doubt. There is likelihood of the appellant company having utilized the remittances for import as claimed by it. The situation has to be viewed from the context that the initial inquiry pertained to 64 remittances. Eventually, the same was narrowed down to only four, and thereafter in respect of the fourth alleged remittance, the respondents were satisfied with the appellants explanation. According to the appellants, remittances to the tune of ₹ 700 crores have been made in relation to the business of the appellant company. If one were to keep the entire conspectus of facts in view, it does not stand to reason that the appellant company would fall foul of the law in respect of such miniscule amounts as claimed by the respondent, compared to the total remittances made by it. - The amounts deposited by the appellants in pursuance of the original order of adjudication before the Appellate Tribunal, shall be refunded without any delay. Similarly, the amounts, if any, deposited in this Court shall also be refunded to the appellants without any delay. - Impugned order is set aside - Decided in favour of Appellant.
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2015 (1) TMI 1074
Violation of procedure contemplated in Rule 4 - Rejection of request of cross examination - Held that:- On a bare reading of the show cause notice it is seen that a complaint was made under section 16(3) of FEMA for contravention of the provisions of FEMA. The adjudicating authority on a perusal of the complaint and after considering the cause assigned by the complainant in the said complaint, stated that it appears that there is contravention in the said complaint against the petitioners of the provisions of section 3(c) read with section 42(1) of FEMA, as mentioned in the complaint. Therefore, the petitioner was required to submit reply to the show cause notice in writing within thirty days from the date of notice as to why the adjudicating proceedings as contemplated under section 13 of FEMA should not be held against them for contravention of the provisions of section 3(c) of FEMA as mentioned in the complaint, which was enclosed along with the show cause notice. The attention of the petitioners was invited to Rule 4 of the Rules. Further, the petitioners were directed to appear either in person or through their Legal Practitioners/Chartered Accountants duly authorised by them to explain and produce such documents as may be useful or relevant to the subject matter of enquiry.
There is nothing to indicate that the adjudicating authority has straight away proceeded to the stage contemplated under sub rule (4) of Rule 4. The show cause notice does not indicate any such conclusion nor it may be stated that the respondent has violated the procedure under Rule 4 of the Rules. In fact, the attention of the petitioners has been drawn to Rule 4 of the Rules. Therefore, the plea raised by the petitioner that the show cause notice is vitiated for having not following the procedure under Rule 4 of the Rules, deserves to be rejected. - Decided against the petitioner.
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2015 (1) TMI 1026
Contravention of Sections 9(1)(b) and 9(1)(d) of FERA - penalty under Section 50 of the FERA - Held that:- Retraction of the confessional statement containing admission of wrong-doings by the appellant came after more than ten years, at the stage of personal hearing only, and not before that. Had the appellant been subjected to threat, coercion or pressure – as alleged by him rather belatedly, he would have retracted his confessional statement soon after making the same, once the alleged threat, coercion or pressure ceased to influence the action of the appellant. It is not his case that the said factors continued to influence him for 10 long years. Moreover, the appellant failed to disclose as to how he was pressurized, coerced, or tortured, and by whom, when he made the earlier confessional statement. The confessional statement was also duly corroborated by the aforesaid independent evidence viz. the list of persons to whom the monies had to be distributed, received by fax from Ubaidullah of Dubai.
Thus, the plea of the appellant, founded upon his so-called highly belatedly retraction of his confessional statement, has to be rejected. Pertinently, though the appellant sought to produce bank transaction statements to show that he had been receiving monies from Ubaidullah of Dubai after the incident in question, and his consistent case is that he had been receiving monies from Ubaidullah of Dubai even earlier, he did not produce any material evidence to show that monies were earlier being received through a legal banking channel. - The appellant has been let off rather lightly considering that he had admitted to having received ₹ 13 Lakhs in all, i.e. ₹ 5 Lakhs on 16.11.1994 and ₹ 8 Lakhs in all, on two earlier occasions. The maximum fine, in these circumstances, could have been to the tune of ₹ 65 Lakhs. However, the appellant has been let off with a nominal fine of ₹ 1.5 Lakhs. - Decided against assessee.
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2015 (1) TMI 977
Contravention of the provisions of Sections 8(1), Section 6(4) and Section 6(5) read with Section 7 of Foreign Exchange Regulation Act, 1973 - Imposition of penalty - Sale of foreign currency at higher value - Held that:- Two persons identified themselves as Hanif and Rajesh Mhatre of Hotel Zam Zam. Mhatre was carrying briefcase along with him. A search revealed that one Suleman Patel with the help of Ms. Pinky Jaisinghani and Sanjay Jadhwani were operating two FFMCs. As a result of the search documents, the authorities recovered and seized the articles under a Panchanama. The identical allegations pertaining to Hanif and Mhatre tendering two pay orders along with the advice letter on the cash counter of M/s. LKP Merchant Financing Ltd. are to be found in the present show cause notice. The statements of all these persons were recorded by the officers of D.R.I. The partner of the present appellants stated that the appellant’s firm has obtained FMC license, dated 28th September 1996 issued by the Reserve Bank of India for dealing with purchase of foreign currency, that he was the person responsible for day to day operation of foreign currency dealing. The foreign currency was sold to Hotel Zam zam, which was admittedly the licensed full fledged foreign money changer. It is in these circumstances that we are of the opinion that some of the allegations on page no. 55 of the paper book pertaining to lack of authorization should not be seen in isolation.
Court is unable to accept the argument that the money or the foreign exchange leaving the authorized persons and reaching or being passed off to the unauthorized person was not the matter which was dealt with by the Hon’ble Supreme Court. Further, violation and contravention emphasized by him was not the subject matter of the Supreme Court judgment and proceedings. Once the Supreme Court was dealing with an identical allegation, identical breach and of similar legal provision and manual, then, we are unable to accept Shri Desai’s argument. The Hon’ble Supreme Court’s judgment is binding upon us. It is too well settled to require any reiteration that the judgment of the Hon’ble Supreme Court continues to bind us and will not lose its binding value merely because some argument which was canvassed before us was not raised or certain aspects were not considered or the relevant provisions were not brought to the notice of the Court. When we find that the judgment of the Hon’ble Supreme Court is dealing with the identical controversy, similar legal provision and even the allegations in the show cause notices are common, then, it would cover the matter fully. - Impugned order set aside - Following decision of Tulip Star Hotels Ltd., Peter Kerkar Versus Special Director of Enforcement [2014 (1) TMI 1348 - SUPREME COURT] - Decided in favour of assessee.
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2015 (1) TMI 929
Condonation of delay - whether for the purpose of counting delay in appeals against orders of adjudicating officer to the Appellate Board, the provisions of Foreign Exchange Regulation Act, 1973 or Foreign Exchange Management Act, 1999 shall apply - Held that:- The impugned order was passed by the Adjudicating Authority on 11.08.2007. It is pleaded on behalf of the appellant and was not disputed by respondents that the said adjudication order was served on the appellant on 25.10.2007. - Therefore, we hold that even u/s 52 of FERA the Appellate Board was empowered to condone the delay, as the appeal was filed before 90 days and not later than 90 days - Following decision of Thirumalai Chemicals Ltd. v. Union of India and others [2011 (4) TMI 489 - SUPREME COURT OF INDIA] - Decided in favour of appellant.
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2015 (1) TMI 883
Credit of Non-convertible Rupee Funds into the Non-Resident (External) Account of the person concerned - contravention of Section 6(4), 6(5) read with S.49 of FERA - Act done by consent, connivance of and attributable to the negligence on the part of the Officials - Held that:- The crediting of Non-Convertible Rupee Funds in the Non-Resident (External) Account of Dr. P.K.Ramakrishnan happened during the period August to December, 1991. Three officials of ANZ Grindlays Bank were involved in it and Show Cause Notice was issued by Respondent No.1 on 21.1.1994 to the Bank as well as the Officials for contravention of Section 6(4), 6(5) read with Section 49 of FERA, alleging that it had taken place with the consent, connivance of and attributable to the negligence on the part of the Officials. It is true that the respondent by letter dated 10.7.2001 ordered that the charges relating to ‘consent’ and ‘connivance’ shall stand deleted from the Show Cause Notice. Though FEMA came into force on 1.6.2000, Sunset clause under Section 49 of the said Act provided for filing of complaints under the FERA, 1973 till 31.5.2002. Taking advantage of it, the Respondent No.1 issued Opportunity Notice to all the three officials on 12.5.2002 and lodged the complaint on 29.5.2002. The Additional Chief Metropolitan Magistrate, New Delhi, on the same day took cognizance of the complaint for the offence under Section 56 of FERA and issued summons.
In spite of having dropped the allegations of ‘consent’ and ‘connivance’, the respondent in their complaint levelled allegations of all the three components, namely, consent, connivance and negligence. The contention of the appellant that the cognizance was taken on irrelevant consideration, is to be countenanced. There was suppression and also material omission in nonmentioning of reply sent by the appellant to the Opportunity Notice, in the complaint. Further, to substantiate the averments in the complaint, not even a single original document was enclosed. It is not known as to, on what material the Additional Chief Metropolitan Magistrate applied his mind, while taking cognizance of the statutory offence. Though the allegation of negligence can be independently looked into, considering the standard of proof in criminal prosecution, we are of the view that, in the present case, the continuance of prosecution against the appellant is not tenable in law and the proceedings are liable to be quashed. - Decided in favour of appellants.
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2014 (12) TMI 1428
Delay in Filing the Appeal - onus to prove sufficient cause of delay - inordinate delay of more than 11 years & 10 months against the Adjudication Order - contraventions under the Foreign Exchange Regulation Act, 1973 - HELD THAT:- If the provisions of FEMA, 1999 are applicable in the present appeal, then onus lies on the applicant/appellant to prove sufficient cause. But, the applicant/appellant has miserably failed to prove the sufficient, cause in filing the present appeal regarding delay because no plausible evidence was adduced by the applicant/appellant. The present appeal has been filed after inordinate delay of more than 11 years & 10 months against the Adjudication Order, which period cannot be extended in any manner without establishing the sufficient cause. Hence, the application for condonation of delay is not maintainable as it be dismissed along with the present appeal.
The applicant/appellant has/miserably failed to give any acceptable and cogent reasons sufficient to condone such a huge delay. There is no momentum of force in the submissions of Ld. Counsel for the applicant/appellants the judgments relied upon by the applicant are not applicable in the present case. There is modicum of merit in the submissions' of Ld. ALA for the respondent. Hence, the application for condonation of delay in filing the appeal as well as the appeal, arising out from the Adjudicating Order passed by the Special Director, Directorate of Enforcement, New Delhi is hereby dismissed
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2014 (12) TMI 1355
Effect of granting post facto approval - Permission accorded u/s 29(1)(b) of the Foreign Exchange Regulation Act, 1973 for the purchase of shares u/s 19(1)(a) FERA for the export of the shares issued to the country of the residence of the non-resident investors as well as under Section 29(1)(a) FERA for non-resident participation in CCL exceeding 40% - HELD THAT:- As 'explained by the Supreme Court in Life Insurance Corporation of India v. Escorts Ltd. [1985 (12) TMI 289 - SUPREME COURT] , the discretion is with the RBI whether to grant permission or not; whether it is an ex post facto or any other permission. The wisdom of the RBI in granting post facto approval is not to be interfered with.
The effect of granting post facto approval is as if the infraction did not occur in the first place and it stands regularized with respect to the date of such infraction. If the orders passed by the RBI dated 9th February 1989 and 11th April 1989 are carefully examined, the post facto approvals virtually cover every aspect of the twelve show cause notices that were issued subsequently to CCL and its directors. In fact the whole idea of a post facto approval was that the failure to obtain prior permission as emphasised in various provisions of the FERA was condoned and therefore regularized. Therefore, this Court fails to understand how despite noticing the above aspect of the aforementioned two letters of the RBI, the SD proceeded to impose penalties as far as SCNs VI-VII are concerned. Only because prior permission was not obtained, this Court has no hesitation in holding that the findings under SCNs VI-VII and the consequent penalties imposed are misconceived and cannot be sustained in law.
Turning to SCN No. VIII, the bone of contention appears to be that there is no specific permission for payment of commission to the individual directors whereas the post facto permission was granted for the payment of the salaries. Admittedly, the word 'salaries' is not defined in the FERA. There is no rational explanation as to why the definition of salary under the Income Tax Act, 1961 could not be adopted for the purposes of determining whether the payment of such commission was also regularized by the RBI. In these circumstances, this Court is unable to agree with the conclusion reached by the SD as regards SCN No. VIII and the penalty imposed thereunder also cannot be sustained.
As far as SCN No. IX is concerned, the view of the SD was that the act of CCL in granting loans was not with specific approval. This finding overlooks the actual wording of the letter dated 11th April 1989 of the RBI. It begins by noticing "your granting of loan to NRI shareholders for investing in companies to shares and issue of bonus/rights shares". Once the allotment of shares had been approved and specific permission had also been given under Section 29(1)(b) FERA to the NRI shareholders for purchasing the shares clearly the entire act of granting loans was itself regularized. Therefore, this Court is unable to sustain the finding of the SD as regards SCN No. IX and the consequent penalties imposed.
The crux of the SCN No. IX concerns para (d) of the letter dated 11th April 1989. The condition for grant of the approval was that the dividends accruals had to be deposited to the investor's ordinary non-resident account and since that was not shown to have been the case, there was violation of Section 9(1)(a) FERA. A careful perusal of SCN No. IX would show that no such allegation has been made and that the notice having not been put on notice on whether or not they have deposited dividends in the ordinary non-residents account, it was not justified to find violation on that basis. As pointed out by Mr. Narang, learned counsel for the Appellant that the Appellants on having been put to notice on such violation could have produced material to explain that they had in fact complied with such condition. In that view of the matter the finding on SCN No. X cannot be sustained and the penalties imposed therein are also hereby set aside.
The issue as far as SCN Nos. XI to XVII is concerned is about the value of the shares allotted to the directors. The SD proceeded' on the basis that the letter dated 11th April 1989 approved the allotment of 5,50,000 shares of ₹ 10 each, and any value in excess of that would be unauthorized. The above approach is based on the fact that the approval by the RBI granted vide letter dated 11th April 1989 was not only for allotment of shares but also for allotment of consequential bonus/right shares. Once the original allotment of shares is regularized then it goes without saying that any consequential allotment of bonus shares would also stand regularized. In respect of each of the directors explanation is available on record as to how they have been allotted bonus shares. This Court is, therefore, unable to accept the reasoning given in the AO order as regards SCN Nos. XI to XVII and the consequent finding regarding violation of Section 29(1)(b) and 19(1)(d) FERA. As a result the AO order dated 15th October 1990 is hereby set aside. The consequent order dated 30th May 2008 of the Appellate Tribunal is also hereby set aside. The appeals are at-lowed in above terms.
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2014 (12) TMI 1348
Initiation of adjudicating proceedings - failure to furnish the exchange control copy of bill of entry in confirmation of having imported materials for which foreign exchange was remitted to the account of SACL at Punjab National Bank, Kasturba Gandhi Marg, New Delhi (PNB) - contravention of Sections 8(3) and 8(4) read with Section 68 of the Foreign Exchange Regulation Act, 1973 (FERA) - Time limitation - HELD THAT:- In the present case, the AT was in error in holding that the appeals before it were barred by limitation since they were filed beyond the outer limit of 90 days. The AT ought to have considered the explanation given by the Appellants for the delay in filing the appeals - Having considered the explanation offered by the Appellants for the delay in filing their respective appeals, the Court is of the view that the delay was for bonafide reasons and ought to be condoned.
The Court notes that the question of the consequences of the failure to make the pre-deposit has been considered by the AT in the context of FERA and not FEMA. Secondly, the merits of the appeals have been considered only in relation to one of the transactions of the paper division of SACL involving US$20,000 and not the other transaction at serial No.8 of the SCN, concerning the fertiliser division of SACL valued at US $ 174,000.
Impugned order set aside - appeal allowed.
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2014 (12) TMI 1225
Waiver of penalty - Held that:- The fact that the company has almost closed business and is incurring losses continuously has not been disputed by the respondent. Prima facie the audit reports are in conformity with the arguments advanced that the company is incurring financial losses regularly. Considering the facts and circumstances as discussed above and in view of the case laws Special Director of Enforcement v. Anil Aggarwal and Anr.[2009 (3) TMI 1011 - DELHI HIGH COURT] and BHAVYA APPARELS PVT. LTD. Versus UNION OF INDIA [2012 (11) TMI 558 - GUJARAT HIGH COURT] we are of the view that the prima facie case for partial waiver of penalty is made out. In this view of the matter, it appears to be appropriate that the appellants be directed to deposit 15% of the amount of penalty imposed against each appellant and further furnished bank guarantee for the balance 85%
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