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FEMA - Case Laws
Showing 701 to 720 of 1378 Records
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2009 (4) TMI 1042
Issues Involved:
1. Maintainability of the appeals.
2. Decision on merits regarding the contravention of Sections 8(1) and 8(2) of FERA.
Summary:
Objection as to Maintainability:
The first issue addressed was the maintainability of the appeals. The respondents' counsel raised a preliminary objection, citing the Supreme Court's decision in *Mohtesham Mohd. Ismail v. Special Director, Enforcement Directorate*, which held that only the Central Government, not the Enforcement Directorate, could file an appeal before the High Court u/s 54 FERA. The appellant's counsel sought adjournments to make submissions, and eventually, a written note of submissions was filed. The court noted the distinction between Section 54 FERA and Section 35 FEMA, concluding that the present appeal, filed by the Central Government represented by the Directorate of Enforcement, was maintainable. The preliminary objection was overruled.
Decision on Merits:
The Enforcement Directorate alleged that the respondents were engaged in unauthorized foreign exchange transactions and seized foreign and Indian currencies from them. The respondents denied the allegations, claiming the seized foreign currency was from legitimate export transactions. The Adjudicating Authority found the respondents guilty of contravening Sections 8(1) and 8(2) FERA and imposed penalties. The respondents appealed to the Appellate Tribunal, which set aside the Adjudicating Authority's order, finding the respondents' explanation sufficient and trustworthy.
The Tribunal noted that the respondents provided evidence of lawful acquisition of foreign exchange through valid export deals, including contracts, receipts, affidavits from buyers, and bank statements. The Tribunal found no merit in the appellant's contention that the respondents had to "prove" lawful acquisition beyond the evidence provided. The Tribunal also found that the initial burden of proving illegal possession of foreign exchange was on the appellant, which was not sufficiently discharged.
The High Court agreed with the Tribunal's findings, stating that the respondents offered a satisfactory explanation for possessing the foreign exchange. The court emphasized that the presumption of culpable mental state and the genuineness of documents under Sections 59 and 72 FERA were rebuttable, and the respondents successfully rebutted these presumptions. The court found no error in the Tribunal's conclusion that the respondents' statements, retracted and alleged to be involuntary, could not solely sustain a finding of contravention.
The court concluded that the appellant failed to raise any question of law, as required for an appeal u/s 54 FERA and Section 35 FEMA, and dismissed the appeals as without merit.
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2009 (4) TMI 966
Issues Involved: Challenge to order dated 16th March 2006 passed by ACMM in Complaint Case No. 180 of 1991 u/s 174 IPC.
Issue 1: Cognizance of Offence under Section 174 IPC
The complainant alleged that the petitioner failed to appear despite summons u/s 40(4) of FERA, leading to an offence u/s 174 IPC. The ACMM took cognizance of the offence on 21st August 1991. The petitioner argued that the complaint was not maintainable post-repeal of FERA by FEMA, and no complaint was filed within the sunset period. The ACMM held that cognizance was already taken and listed the case for pre-charge evidence on 17th April 2006.
Issue 2: Maintainability of Complaint
The petitioner contended that the complaint did not mention Section 56 FERA, which was the correct provision for the offence. The Supreme Court's ruling in Enforcement Directorate v. M. Samba Siva Rao mandated trying non-compliance under Section 56 FERA, not Section 174 IPC. The ACMM's decision to proceed under Section 56 FERA was deemed erroneous by the High Court.
Issue 3: Conversion of Summons Case
The ACMM erred in converting the summons case into a warrant case under Section 259 CrPC. The failure to mention Section 56 FERA in the complaint altered its nature, making it triable only in a summary manner u/s 174 IPC. The legal position did not change due to the accused's delayed appearance, leading to the quashing of all proceedings.
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2009 (4) TMI 916
Petition under Article 226 - Complaint u/s 56 of the FERA r/w sub-sections 3 and 4 of Section 49 of FEMA - failure to comply with statutorily requirements of issuance of notice u/s 61 (2)(ii) of FERA - quashing of proceedings - petitioner points out that no proof of service has been filed along with the complaint - respondents have not cared to cite any of the persons in the list of witnesses. It is contended that so far as the criminal trial is concerned, the respondent would stand precluded from examining any witness who has not been cited as a witness.
HELD THAT:- It would appear that the statutory requirement of issuance of notice under proviso of sub clause (ii) of sub-section 2 of Section 61, its date and manner in the instant case as well as the failure to consider the petitioner's reply or even place it before the court, has resulted in manifest error in the exercise of jurisdiction by learned trial judge. The order taking cognizance in the instant case and directing issuance of summons, is clearly without application of mind and cannot stand in law. In the light of the well settled principles noticed, there is no embargo from quashing the proceedings which are pending before the ld trial court.
Bare perusal of the complaint, it has been found that the complaint has been filed without compliance of the provisions of Section 61 of the FERA, 1973. No further inquiry is necessary or required to be conducted for the purposes. The compliance is mandatory and goes to the root of the matter. There is a statutory prohibition to the filing of a complaint without such statutory compliance. The objection raised by the petitioner to the filing and maintainability of the prosecution against it, is squarely covered under the guideline 6 laid down by the Apex Court in State of Haryana Vs. Chaudhary Bhajanlal [1990 (11) TMI 386 - SUPREME COURT] and Smt. Nagawwa vs. Veeranna Shivalingappa Konjalgi & Ors [1976 (4) TMI 213 - SUPREME COURT].
The respondents have urged at length that the petitioner must be required to undergo the trial and establish his objections as a defence to the prosecution. The present case is one where examination of a statutory prohibition is required to be undertaken. In the light of clear principles laid down by the Apex Court, such an objection has to be held to be wholly misconceived. There would be no warrant for requiring the petitioner to defend a prolonged trial, if the filing of the complaint itself is statutorily prohibited. Continuation of such proceedings against the petitioner would, therefore, be vexatious, useless, serving no purpose and defeating the ends of justice.
Therefore, this writ petition is allowed. It is directed that the proceedings arising out of complaint, entitled Enforcement Directorate v. Sanjay Malviya & Ors. pending in the court of ld Additional Chief Metropolitan Magistrate, as against the petitioner alone shall stands quashed. The order of the ld Metropolitan Magistrate taking cognizance of the complaint against the petitioner herein and directing issuance of summons to him shall also stand quashed.
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2009 (4) TMI 915
Issues Involved:
1. Abuse of Process of Law
2. Reasonable Steps for Recovery
3. Adequacy of Opportunity Notice
4. Role of Directors in the Complaint
5. Compliance with RBI Guidelines
6. Application of Section 18 of FERA
Detailed Analysis:
1. Abuse of Process of Law:
The petitioners argued that the complaint filed under Section 56 of FERA was a gross abuse of the process of law, filed hastily to meet the deadline of 31.05.2002. The court found that the respondents had not adequately considered the petitioners' communications and steps taken for recovery, thus constituting an abuse of process.
2. Reasonable Steps for Recovery:
The petitioners demonstrated that they had taken reasonable steps to recover the outstanding export proceeds, including filing civil suits and obtaining decrees against foreign buyers. The court noted that Section 18(2) and (3) of FERA requires exporters to take reasonable steps for recovery, not necessarily to ensure recovery. The court found that the petitioners had fulfilled this requirement.
3. Adequacy of Opportunity Notice:
The petitioners contended that the opportunity notice issued under Section 61(2) of FERA was devoid of material particulars and did not consider the several correspondences exchanged. The court agreed, stating that the opportunity notice is a statutory requirement and not an empty formality. The notice issued was found to be insufficient and lacking in material particulars.
4. Role of Directors in the Complaint:
The complaint lacked material particulars regarding the role of the directors, who were made parties to the complaint. The court referenced the decision in S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla & Anr., concluding that the complaint did not adequately specify the directors' involvement, thus failing to meet legal standards.
5. Compliance with RBI Guidelines:
The petitioners argued that the outstanding amount was approximately Rs. 1.40 crores, not Rs. 2.0 crores as mentioned in the complaint. The court noted that the RBI guidelines dated 05.07.2001 stipulated prosecution for non-realization of export proceeds worth Rs. 2.0 crores or more. The court found that the department failed to follow these guidelines, as the outstanding amount was indeed less than Rs. 2.0 crores.
6. Application of Section 18 of FERA:
The court emphasized that Section 18(2) and (3) of FERA requires exporters to take reasonable steps for recovery. The petitioners had provided detailed information and documentation of the steps taken, including legal actions and recoveries made. The court concluded that the petitioners had taken all reasonable steps as required by law.
Conclusion:
The court quashed the complaint bearing No. 361/2002, finding that the petitioners had taken all reasonable steps for recovery, the opportunity notice was inadequate, and the complaint did not comply with RBI guidelines. The court also noted the lack of material particulars regarding the directors' roles and concluded that proceeding with the complaint would be a futile exercise. No order as to costs was made.
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2009 (4) TMI 821
Whether the Tribunal failed to consider the violation of principles of natural justice in not granting an opportunity to the appellant for cross-examination of the witnesses and that the findings and orders are based on inadmissible and flimsy evidence?
Whether the Tribunal ignored the subjective satisfaction regarding the voluntary nature of statements, when the statement of the appellant was retracted at the earliest point of time and the appellant reported to the Magistrate about slapping by the Enforcement Officials, as held by the Supreme Court in KTMS Mohamed’s case reported [1992 (4) TMI 6 - SUPREME Court]?
Whether the Tribunal failed to consider the absolute confiscation of Indian currency is not sustainable in law on mere presumptions in respect of the order of confiscation and the finding of contravention?
Whether the order passed by the Tribunal is invalid/non est in law in view of the violation of Section 52(6) of the FERA 1973 r/w Section 20(2)(b) of the FEMA 1999?
Held that:- The questions raised by the appellant are purely questions of facts and not questions of law. We reject the appeal and the Civil Miscellaneous Appeal stands dismissed.
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2009 (4) TMI 464
Whether the Appellate Tribunal is right in relying on the confessional statement of the appellant dated 2-3-1981, which was retracted by him, in his letter dated 6-3-1981 sent from the Central Prison, Madras, which is inadmissible in law and cannot be used against him for any purpose in view of the retraction at the earliest point of time?
Held that:- The fact that adjudication proceedings does not mean that evidence and statements obtained by unfair and unlawful means can be accepted. The Court must be satisfied that it is reliable. Therefore, this Court cannot accept retracted statements made by the accused persons and convict them on the basis of such statements on the ground that the rigour of Criminal Procedure Code or the FER Act may not be applied to these proceedings. We have satisfied ourselves that even though the appellant claims that he has retracted the statements, the receipt of which is denied by the respondent there are enough corroborating materials and documentary evidence to confirm the finding against the appellant. Appeal dismissed.
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2009 (3) TMI 1011
Issues Involved:
1. Legality of the Tribunal's order dispensing with the statutory requirement of pre-deposit of penalty.
2. Determination of whether undue hardship was established by the respondents.
3. Examination of the merits of the adjudicatory findings by the Special Director.
4. Applicability of the Foreign Exchange Regulation Act (FERA) versus the Foreign Exchange Management Act (FEMA).
Issue-wise Detailed Analysis:
1. Legality of the Tribunal's Order Dispensing with the Statutory Requirement of Pre-Deposit of Penalty:
The Special Director of Enforcement challenged the Tribunal's order which unconditionally dispensed with the statutory requirement of pre-deposit of the penalty amount before the respondents' appeal could be heard. The Tribunal reasoned that the proceedings were conducted under FERA and not FEMA, thus Section 19(1) of FEMA was not applicable. The Tribunal also concluded that the appellants had a prima facie strong case and that undue hardship would be caused by the pre-deposit requirement. The High Court found that the Tribunal erred in its understanding that the burden of proof in FERA proceedings was "beyond reasonable doubt," which is incorrect as per the Supreme Court's ruling in Director of Enforcement v. M.C.T. M. Corpn. (P) Ltd. The High Court emphasized that the Tribunal must follow the legislative mandate of pre-deposit unless undue hardship is clearly established.
2. Determination of Whether Undue Hardship Was Established by the Respondents:
The Tribunal granted complete exemption from pre-deposit by concluding that the respondents had a prima facie strong case and that undue hardship would be caused by the pre-deposit. However, the High Court noted that the Tribunal did not properly scrutinize the individual facts to establish undue hardship as required by the Supreme Court's rulings in Benara Valves Ltd. v. CCE and Monotosh Saha -Vs- Special Director, Enforcement Directorate. The High Court emphasized that undue hardship must be shown to be excessive and disproportionate to the nature of the requirement.
3. Examination of the Merits of the Adjudicatory Findings by the Special Director:
The Special Director argued that the respondents failed to establish a prima facie case and did not disclose the source of funds amounting to over Rs. 208 crores. The adjudicatory order relied on statements and documents obtained during search and seizure, which indicated manipulation of foreign exchange by Sterilite and its directors. The Tribunal, however, found that the Special Director's findings were not beyond reasonable doubt and that RBI permissions were available. The High Court noted that the Tribunal's approach was improper as it did not consider the standard of proof required in FERA proceedings, which is not "beyond reasonable doubt" but rather a balance of probabilities.
4. Applicability of the Foreign Exchange Regulation Act (FERA) Versus the Foreign Exchange Management Act (FEMA):
The Tribunal reasoned that the appeal was governed by FERA as the proceedings were initiated under FERA and the appeal was filed before the newly created Tribunal after the abolition of the FERA Board by Section 49(1) of FEMA. The High Court agreed that the appeal should be disposed of under FERA and not FEMA. However, the High Court found that the Tribunal did not properly apply the principles of undue hardship and pre-deposit requirements as mandated by the relevant legal provisions and judicial precedents.
Conclusion:
The High Court concluded that the Tribunal's order was unsustainable as it did not properly address the issue of undue hardship and misapplied the standard of proof required in FERA proceedings. The Tribunal's order was set aside, and the respondents' applications for waiver of pre-deposit requirements were to be heard afresh in accordance with the law. The writ petitions were allowed, and all pending applications were disposed of without any order on costs.
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2009 (3) TMI 982
Issues Involved:
1. Legality of the forfeiture of the house property and joint bank account.
2. Validity of the show-cause notice under SAFEMA.
3. Competent authority's adherence to procedural requirements under SAFEMA.
4. Relevance of Income Tax assessments and Voluntary Disclosure Scheme in SAFEMA proceedings.
5. Burden of proof and the role of the Income Tax Department in verifying the legality of the sources of income.
Issue-wise Detailed Analysis:
1. Legality of the Forfeiture of the House Property and Joint Bank Account:
The writ petition challenges the order of the Appellate Tribunal confirming the forfeiture of the house property and the amount in the joint account under SAFEMA. The petitioner argued that the properties were legally acquired and not from tainted funds. The Tribunal, however, rejected the petitioner's proof, citing the lack of independent evidence and the inability to trace the sources of income to legitimate means.
2. Validity of the Show-Cause Notice under SAFEMA:
The petitioner contested the show-cause notice issued under Section 6(1) of SAFEMA, arguing that it was invalid due to the absence of material evidence and relevant information justifying the notice. The competent authority had recorded reasons to believe that the properties were illegally acquired, but the petitioner claimed these reasons were not substantiated with adequate evidence or material.
3. Competent Authority's Adherence to Procedural Requirements under SAFEMA:
The petitioner argued that the competent authority failed to utilize the powers under Sections 18(2) and 18(3) of SAFEMA to conduct a thorough inquiry or investigation into the legitimacy of the sources of income. The court noted that the competent authority and the Tribunal did not make use of the Income Tax Department officers to verify the claims made by the petitioner, which was a procedural lapse.
4. Relevance of Income Tax Assessments and Voluntary Disclosure Scheme in SAFEMA Proceedings:
The petitioner presented income tax assessments and returns, including those filed under the Voluntary Disclosure Scheme (VDS), as evidence of legitimate acquisition of properties. The Tribunal dismissed these assessments, suggesting that the petitioner might have manipulated the income tax records to create evidence. The court, however, emphasized that these entries were made before the issuance of the show-cause notice and should have been considered valid unless proven otherwise by a proper inquiry.
5. Burden of Proof and the Role of the Income Tax Department:
The court highlighted that the burden of proving the legitimacy of the properties lies with the petitioner, but the competent authority must also substantiate its claims of illegality with concrete evidence. The failure to engage the Income Tax Department to verify the petitioner's claims was a significant oversight. The court referenced previous judgments emphasizing the strict construction of forfeiture provisions and the necessity for the competent authority to provide clear and adequate reasons for its belief that the properties were illegally acquired.
Conclusion:
The court allowed the writ petition, setting aside the orders of the competent authority and the Appellate Tribunal. It held that the respondents failed to follow the procedural requirements under SAFEMA and did not adequately disprove the petitioner's claims of legitimate acquisition of the properties. The court emphasized the necessity of a thorough and fair inquiry, utilizing the powers vested under SAFEMA, to ensure justice and adherence to legal standards.
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2009 (3) TMI 864
Issues:
Challenge to order imposing penalty under Foreign Trade (Development and Regulation) Act for alleged violation of terms and conditions of Advance Licence.
Analysis:
The appellants filed a writ petition seeking to quash an order passed by the 2nd respondent imposing a penalty of Rs. 1.50 crores under Section 11 read with Section 14 of the Foreign Trade (Development and Regulation) Act, 1992. The penalty was imposed for the alleged violation of terms and conditions of an Advance Licence granted for importing mulberry raw silk fabrics. The order was confirmed in appeal by the 3rd respondent. The main contention raised by the appellants was the lack of a personal hearing before imposing the penalty, as required under Section 14(d) of the Act. The authorities had given the petitioners an opportunity for a personal hearing on a specified date, but the appellants failed to appear and only submitted a representation. Consequently, the impugned order was passed by the 2nd respondent.
Upon review, the Court found that the decision-making process was conducted without any illegality or irregularity. The Court emphasized that the judicial review under Articles 226 and 227 of the Constitution of India pertains to examining the legality and regularity of the decision-making process. Since the Court was satisfied that there was no flaw in the decision-making process, it declined to interfere with the impugned order. Consequently, the writ appeal was dismissed, upholding the order imposing the penalty under the Foreign Trade (Development and Regulation) Act for the violation of the terms and conditions of the Advance Licence.
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2009 (2) TMI 929
Issues:
Prayer for discharge in a complaint case under FERA and FEMA. Allegations against the company and the petitioner as a director. Interpretation of Section 68 FERA regarding liability of directors. Comparison with relevant case law. Dispute over petitioner's directorship during the relevant period. Decision on the petitioner's liability and discharge in the complaint case.
The judgment concerns a petition seeking the discharge of the petitioner in a complaint case under the Foreign Exchange Regulation Act 1973 (FERA) and the Foreign Exchange Management Act 1999 (FEMA). The complaint was filed by the Enforcement Directorate against a company and the petitioner, described as a director, for failure to realize export proceeds and contravening FERA sections 18(2) and 18(3). The petitioner argued that the complaint did not establish a prima facie case against him and that he had resigned as a director before the alleged offense period. The respondent contended that the petitioner being a director during part of the relevant period was sufficient to establish a case.
The key issue revolved around the interpretation of Section 68 FERA, which deems persons in charge of a company's business during a contravention to be guilty. The court referenced case law emphasizing that mere designation as a director is insufficient to establish liability and that actual involvement in the company's affairs at the time of the offense is crucial. Drawing parallels with precedent cases, the court analyzed the language of the complaint and concluded that it failed to establish the petitioner's liability under FERA sections 18(2) and 18(3) read with Section 68.
Regarding the petitioner's directorship status, it was undisputed that he had resigned before the due date for realizing export proceeds, as evidenced by the filing with the Registrar of Companies. The court held that the deeming provision of Section 68 FERA was not applicable to the petitioner at the time of the alleged offense, further supporting the decision to discharge him from the complaint case.
In the final ruling, the court directed the discharge of the petitioner from the complaint case, clarifying that the proceedings would continue against other accused parties. The judgment highlighted the importance of establishing actual involvement in a company's affairs for liability under FERA and upheld the petitioner's discharge based on the lack of prima facie evidence against him and his non-director status during the relevant offense period.
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2009 (1) TMI 954
Issues Involved:
1. Contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act (FERA).
2. Admissibility and relevance of evidence.
3. Burden of proof and circumstantial evidence.
4. Validity of the penalty imposed.
Issue-wise Detailed Analysis:
1. Contravention of Section 9(1)(a) of the Foreign Exchange Regulation Act (FERA):
The appellants were penalized for violating Section 9(1)(a) of the FERA by making payments to non-residents without the Reserve Bank of India's permission. The adjudicating authority found that the appellants received substantial amounts from NRE accounts of NRIs and made payments in return, which contravened the statutory scheme under Section 9(1)(a). The appellants argued that these payments were gifts, but the tribunal found no evidence of a genuine relationship or reason for such large gifts, thus confirming the contravention.
2. Admissibility and Relevance of Evidence:
The appellants contended that the evidence against them was insufficient and primarily based on statements from third parties, which they deemed irrelevant. However, the tribunal held that the statements of other beneficiaries who admitted to paying a premium for similar drafts were relevant and established a pattern. The tribunal emphasized that the appellants failed to provide any documentary evidence to support their claim of receiving genuine gifts.
3. Burden of Proof and Circumstantial Evidence:
The tribunal relied on circumstantial evidence to establish the appellants' guilt. It referenced the Supreme Court's rulings on circumstantial evidence, noting that a complete chain of incriminating circumstances can prove guilt beyond a reasonable doubt. The tribunal found that the appellants' inability to explain the large sums received from NRIs, coupled with the suspicious nature of the NRE account transactions, created a strong presumption against them. The tribunal also cited Section 106 of the Evidence Act, which places the burden of proving facts within the special knowledge of the accused.
4. Validity of the Penalty Imposed:
The tribunal upheld the penalties imposed on the appellants, finding them commensurate with the gravity of the offense. The penalties of Rs. 40,000 and Rs. 60,000 respectively, were deemed appropriate given the substantial amounts involved and the clear contravention of FERA provisions. The tribunal dismissed the appeals, confirming the adjudicating officer's order and appropriating the pre-deposited amounts towards the penalties.
Conclusion:
The tribunal's judgment comprehensively addressed the issues of contravention of FERA, the relevance of evidence, the burden of proof, and the validity of penalties. It confirmed the appellants' guilt based on circumstantial evidence and upheld the penalties imposed, dismissing the appeals for lack of merit.
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2009 (1) TMI 953
Issues Involved:
1. Contravention of sections 8(1) and 73(3) of the Foreign Exchange Regulation Act, 1973 (FERA).
2. Contravention of section 9(1)(a) read with sections 68(1) and 68(2) of FERA.
3. Determination of residential status under section 2(p) of FERA.
4. Validity of statements recorded under section 107 of the Customs Act.
5. Ignorance of law as a defense.
6. Imposition and quantum of penalty.
Issue-wise Detailed Analysis:
1. Contravention of sections 8(1) and 73(3) of FERA:
The appellants were charged with acquiring UAE Dhs. 1,22,900 as freight charges and failing to offer it for sale to an authorized dealer, and for purchasing an old engine for UAE Dhs. 30,000 and transferring the amount to M/s. Al Mymoon Ship & Boat Services, Dubai. The Tribunal found that the appellants had indeed contravened these provisions as they did not obtain the necessary permissions from the Reserve Bank of India (RBI).
2. Contravention of section 9(1)(a) read with sections 68(1) and 68(2) of FERA:
The Tribunal held that the appellants made payments to persons resident outside India without the required permissions. The statement by Hazi Ahemad Hazi Hasan Juneja, corroborated by OS Mamad Juneja, established that the transactions were conducted on behalf of Smt. Karimabai, thus contravening section 9(1)(a) read with sections 68(1) and 68(2) of FERA.
3. Determination of residential status under section 2(p) of FERA:
The appellant Smt. Karimabai argued that she was not a resident of India during the relevant period. However, the Tribunal rejected this contention, noting that she held an Indian passport, conducted business in India, and had a savings account in India. The Tribunal concluded that she did not provide sufficient evidence to prove her non-resident status.
4. Validity of statements recorded under section 107 of the Customs Act:
The appellants argued that the statements recorded under the Customs Act should not be admissible. However, the Tribunal cited Supreme Court judgments (Poolpandi v. Supdt. Central Excise and Naresh Sukhawani v. Union of India) to assert that statements made under the Customs Act are substantive evidence and can be used in proceedings under FERA.
5. Ignorance of law as a defense:
The appellants claimed ignorance of the requirement to obtain RBI permission. The Tribunal dismissed this defense, citing the legal maxim "Ignorantia juris non excusat" (ignorance of law is no excuse). The Tribunal emphasized that ignorance of the law cannot absolve the appellants from liability.
6. Imposition and quantum of penalty:
The Tribunal found that the penalties imposed were excessive given the circumstances and the age of the case. The penalties were reduced from Rs. 1,00,000 to Rs. 80,000 for Smt. Karimabai and from Rs. 50,000 to Rs. 30,000 for Haji Ahmed Haji Hasan Juneja. The Tribunal directed the appellants to pay the balance penalty within 15 days, failing which recovery actions could be initiated.
Conclusion:
The Tribunal partly allowed the appeals, reducing the penalties but upholding the findings of contraventions under FERA. The pre-deposited amounts were appropriated towards the penalties, and the appellants were instructed to pay the remaining amounts within the stipulated time.
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2009 (1) TMI 952
Issues Involved:
1. Contravention of Section 9(1)(f)(1), 9(1)(d), and 14 of the FER Act.
2. Contravention of Section 8(1) and 64(2) of the FER Act.
3. Authority and jurisdiction of the adjudicating officer post-repeal of the Foreign Exchange Regulation Act, 1973.
4. Violation of principles of natural justice.
5. Corroboration and admissibility of retracted admissional statements.
6. Proof beyond reasonable doubt.
Detailed Analysis:
1. Contravention of Section 9(1)(f)(1), 9(1)(d), and 14 of the FER Act:
The first appellant was penalized Rs. 25 lakhs for receiving Rs. 45 lakhs from the second appellant in consideration of receiving foreign currency of US Dollar 908598 and Pound 13000 from one Vijay Harish Bhai at Dubai. Similarly, the second appellant was penalized Rs. 25 lakhs for making the payment to the first appellant. The fourth appellant was penalized Rs. 70000 for aiding the second appellant in receiving foreign exchange of US Dollar 16723 in lieu of payment of Rs. 7 lakhs. The sixth appellant was penalized Rs. 15000 for aiding the second appellant in receiving US Dollar 3250 in lieu of payment of Rs. 1,50,000/-.
2. Contravention of Section 8(1) and 64(2) of the FER Act:
The third appellant was penalized Rs. 25000 for aiding the second appellant in unauthorizedly acquiring US Dollar 69973 and borrowing US Dollar 28000. The fifth appellant was penalized Rs. 25000 for aiding the second appellant in borrowing foreign currency of US Dollar 28000.8.
3. Authority and jurisdiction of the adjudicating officer post-repeal of the Foreign Exchange Regulation Act, 1973:
The appellants contended that the impugned order was passed after the repeal of the Foreign Exchange Regulation Act, 1973, w.e.f. 31.5.2000, and thus, the adjudicating officer had no authority or jurisdiction to pass the adjudication order. However, this argument was not upheld as the proceedings were initiated before the repeal, and the adjudicating authority continued to have jurisdiction to complete the adjudication.
4. Violation of principles of natural justice:
The appellants argued that the cross-examination of the co-appellants was not allowed despite repeated demands, leading to a violation of the principles of natural justice. The tribunal found that the appellants had an opportunity to present their case and that the procedural requirements were met.
5. Corroboration and admissibility of retracted admissional statements:
The tribunal discussed the retraction of admissional statements. It was emphasized that retraction alone does not invalidate the statements unless it is clearly shown that the statements were made under threat and coercion. The tribunal referred to several Supreme Court judgments, including K.T.M.S. Mohd. v. UOI, K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin, and others, to establish that retracted confessions can be relied upon if found to be voluntary and true. The tribunal concluded that the admissional statements of the appellants were voluntary and true.
6. Proof beyond reasonable doubt:
The appellants argued that the proof beyond reasonable doubt was not reached. The tribunal referred to the Supreme Court's judgment in Collector of Customs, Madras & Ors. v. D. Bhoormull, which stated that the burden of proving the case with mathematical precision is not required. The tribunal held that the evidence presented was sufficient to establish the contraventions beyond reasonable doubt.
Conclusion:
The tribunal upheld the penalties imposed on the appellants for various contraventions of the FER Act. The arguments regarding the lack of jurisdiction, violation of natural justice, and the inadmissibility of retracted statements were not accepted. The tribunal found that the evidence presented was sufficient to establish the contraventions beyond reasonable doubt.
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2009 (1) TMI 951
Issues:
Challenge to Adjudication Order imposing penalties under FER Act, 1973, non-appearance of appellants, application for modification of pre-deposit order, power of review under FER Act, 1973, grounds for review, dispensation of pre-deposit, statutory right to appeal, distinction between review and appeal, power to correct clerical errors, error apparent on face of record, jurisdiction for rectification, interpretation of statutory provisions, consequences of non-deposit of penalty.
Detailed Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange involved challenges to an Adjudication Order imposing penalties under the Foreign Exchange Regulation Act, 1973. The appellants failed to appear or be represented, leading to the ex parte consideration of their appeals. The appellants had previously applied for modification of a pre-deposit order, which was rejected. The Tribunal emphasized that once a pre-deposit order is passed, it cannot be revisited merely upon request, as there is no power of review granted under the FER Act, 1973. The grounds for review are well-settled, and the appellant did not present sufficient grounds for relief (paragraphs 3-6).
The Tribunal clarified that the right to appeal is a statutory provision under the FER Act, 1973, with a pre-condition of making a pre-deposit of penalty. However, the Tribunal can dispense with pre-deposit based on undue hardship. The judgment referenced a Supreme Court case stating that a mere assertion of undue hardship is not enough; the factual scenario must be considered. The distinction between review, appeal, and revision was highlighted, emphasizing that the right to review is not a procedural right but a substantive one under the FER Act, 1973 (paragraphs 7-8).
Regarding the power to correct clerical errors, the Tribunal explained that modification of an order is not permissible unless there is an apparent error on the face of the order. The judgment emphasized that the absence of reasons in an order does not make it erroneous, and such errors cannot be corrected by the same Tribunal. The appellants' application for review or modification was rejected based on these principles (paragraphs 9-10).
The judgment cited Supreme Court cases to illustrate the distinction between a mere erroneous decision and an error apparent on the face of the record. An error for rectification must strike one immediately upon looking at the record without requiring lengthy reasoning. The statutory scheme under section 52(2) of the FER Act, 1973, mandates pre-deposit of penalty unless dispensed with due to undue hardship. The Tribunal has no authority to interpret the provisions differently, and the consequences of non-deposit were clearly communicated to the appellants (paragraphs 11-17).
Ultimately, the appeals were dismissed as the appellants failed to comply with the pre-deposit order, as directed by the Tribunal in its previous order. The judgment reiterated the importance of statutory provisions and the consequences of non-compliance (paragraph 18).
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2009 (1) TMI 950
Issues:
Violation of section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 - Penalty imposed for receiving payments from abroad without RBI permission - Retraction of confessional statement - Cross-examination of witness denied - Amount of penalty imposed - Request for leniency.
Analysis:
1. The appeal was filed against an Adjudication Order imposing a penalty for contravening section 9(1)(b) of the Foreign Exchange Regulation Act, 1973 by receiving payments from abroad without RBI permission. The appellant, Pukhraj Ganeshmal Jain, admitted receiving Rs. 12,00,000 in cash from unknown persons under instructions from Dubai. The appellant contested the order, claiming coercion in his confessional statement and seeking cross-examination of a witness.
2. The appellant's association with A.N. Abdul Rehman was established through seized documents and statements. The appellant's retraction of the statement was challenged, citing lack of evidence of coercion. The burden of proof regarding the alleged coercion rested on the appellant, which was not satisfactorily discharged. The Supreme Court's precedent emphasized the need for voluntary and corroborated confessions.
3. A.N. Abdul Rehman's detailed statements and the appellant's admission of receiving cash for making jewelry corroborated the charges. The appellant's retraction was deemed an afterthought without basis. The appellant failed to explain the incriminating evidence linking him to the illegal payments.
4. The denial of cross-examination of A.N. Abdul Rehman was justified under established legal principles. Refusal of cross-examination was not considered a violation of natural justice, as per Supreme Court rulings. The appellant's contention regarding the lack of cross-examination opportunity was dismissed.
5. The appellant was found guilty of receiving payments from abroad without RBI permission, leading to the imposition of a penalty of Rs. 1,80,000. Considering the circumstances, the penalty was reduced to Rs. 1,50,000 to balance justice. The appellant was directed to pay the remaining penalty amount within 15 days to avoid further legal action.
This judgment highlights the importance of voluntary and corroborated confessions, burden of proof in coercion claims, and the discretion of authorities in denying cross-examination. The penalty amount was adjusted based on the circumstances and the appellant's request for leniency, emphasizing the need for compliance with foreign exchange regulations.
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2009 (1) TMI 949
Issues Involved:
1. Legality of adjudication proceedings based on belated SCNs.
2. Vagueness and improbability of allegations in SCNs III and IV.
3. Admissibility of involuntary statements.
4. Different treatment of appellants compared to co-accused.
5. Nexus between appellants and Iqbal of Dubai.
6. Physical feasibility of executing huge payments.
7. Proof of charges beyond reasonable doubt.
Detailed Analysis:
1. Legality of Adjudication Proceedings Based on Belated SCNs:
The appellants contended that the adjudication proceedings were illegal because the SCNs were issued after the expiry of six months from the date of seizure without an extension of time by the concerned authority. The Tribunal did not explicitly address this issue in the judgment.
2. Vagueness and Improbability of Allegations in SCNs III and IV:
The appellants argued that SCNs III and IV contained vague and improbable allegations based on involuntary and uncorroborated statements. The Tribunal noted that the charges against noticees under SCNs I and II were dropped, indicating inconsistency in the treatment of similar cases.
3. Admissibility of Involuntary Statements:
The appellants contended that the adjudication order was based on involuntary statements extracted under duress and physical torture, as evidenced by an order from the CMM, Mumbai. The Tribunal emphasized that retracted confessional statements must be voluntary and true to be admissible. The Tribunal found that the statements of Ashok and Chandanmal were not corroborated by other evidence, making them inadmissible.
4. Different Treatment of Appellants Compared to Co-Accused:
The appellants argued that the adjudicating officer accepted the retractions of co-accused in SCNs I and II but did not accept similar retractions from the appellants. The Tribunal found this inconsistent and noted that Ashok, who was subjected to the same treatment, should not be treated differently without material evidence.
5. Nexus Between Appellants and Iqbal of Dubai:
The appellants contended that the impugned order failed to establish any nexus between Iqbal of Dubai and the appellants. The Tribunal noted that the impugned order did not specify the person on whose instructions the payments were received or distributed, making the phrase "instructions from abroad" lose its significance.
6. Physical Feasibility of Executing Huge Payments:
The appellants argued that it was highly improbable that three persons could physically execute the receipt and making of huge payments simultaneously. The Tribunal did not explicitly address this issue but noted the lack of corroborative evidence for the figures mentioned in the impugned order.
7. Proof of Charges Beyond Reasonable Doubt:
The appellants relied on the Supreme Court decision in Shanti Prasad Jain v. Director of Enforcement, FERA, to argue that the respondent failed to prove the charges beyond reasonable doubt. The Tribunal agreed, noting the lack of corroborative evidence and inconsistencies in the impugned order.
Conclusion:
The Tribunal set aside and quashed the impugned order, allowing the appeals. The judgment highlighted the need for corroborative evidence and consistency in the treatment of similar cases, emphasizing that retracted confessional statements must be voluntary and true to be admissible. The charges under sections 9(1)(b), 9(1)(d), and 9(1)(f)(i) of the FER Act, 1973, were not sustained due to the lack of evidence and inconsistencies in the adjudication process.
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2009 (1) TMI 948
Issues Involved:
1. Jurisdiction of the Appellate Tribunal for Foreign Exchange (ATFE) to entertain revision petitions post-repeal of the Foreign Exchange Regulation Act (FERA), 1973.
2. Authorization of the Deputy Legal Advisor (DLA) to file revision petitions on behalf of the Union of India.
3. Contravention of Sections 9(1)(b) and 9(1)(d) of the FERA, 1973 by the respondents.
4. Validity of the impugned adjudication order exonerating the respondents.
5. Determination of penalties for the contraventions.
Detailed Analysis:
1. Jurisdiction of ATFE:
The Tribunal examined whether it could entertain revision petitions after the repeal of FERA, 1973, and its replacement by the Foreign Exchange Management Act (FEMA), 1999. It was contended that the revisional jurisdiction is statutory and not explicitly transferred to ATFE. However, the Tribunal concluded that Section 49 of FEMA, 1999, implicitly allows for the continuation of pending appeals and revision petitions from the FERA Board to ATFE. It was noted that the repealed Act's provisions are preserved under Section 49(4) of FEMA, 1999, and Section 6(e) of the General Clauses Act, 1897, allowing the continuation of legal proceedings under the repealed statute. Thus, the Tribunal held that it could exercise revisional powers to maintain the purity of justice.
2. Authorization of the Deputy Legal Advisor:
The Tribunal considered the objection regarding the authorization of Shri T.K. Gadoo, DLA, to file the revision petitions. It was argued that he was not authorized to file any revision or appeal on behalf of the Union of India. However, the Tribunal noted that Shri T.K. Gadoo, DLA, regularly presented arguments on behalf of the Directorate of Enforcement and was authorized under Article 77 of the Constitution of India to file the revision petition. Therefore, the objection was dismissed.
3. Contravention of Sections 9(1)(b) and 9(1)(d) of FERA, 1973:
The respondents were charged with receiving money on behalf of an NRI and handing it over to another individual who purchased foreign currency. The Tribunal found that the respondents admitted to receiving two NRF drafts of Rs. 1,25,000 each and paying a total amount of Rs. 2,81,628, including a 10% commission, to respondent No. 2. The Tribunal held that this transaction violated Sections 9(1)(b) and 9(1)(d) of FERA, 1973, as it involved receiving money on behalf of a non-resident and making payments in lieu thereof.
4. Validity of the Impugned Adjudication Order:
The Tribunal scrutinized the impugned adjudication order that exonerated the respondents despite the evidence of contravention. It emphasized that circumstantial evidence could be sufficient to establish the case, referencing the Supreme Court's judgment in Trimukh Maroti Kirkan v. State of Maharashtra, which upheld convictions based on circumstantial evidence. The Tribunal concluded that the adjudication order contained serious errors and wrongly exonerated the respondents.
5. Determination of Penalties:
Upon finding the respondents guilty of contraventions, the Tribunal decided to impose penalties. It noted that remanding the matter back to the adjudicating officer would prolong litigation unnecessarily. Therefore, the Tribunal imposed a penalty of Rs. 1 lakh each on respondents 1 and 3 and Rs. 2 lakhs on respondent 2, considering the gravity of their actions and their roles in the violations.
Conclusion:
The revision petition was allowed, and penalties were imposed on the respondents for contraventions of Sections 9(1)(b) and 9(1)(d) of FERA, 1973. The respondents were directed to deposit the penalties within seven days, failing which the Enforcement Directorate could recover the amounts in accordance with the law.
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2009 (1) TMI 922
Issues involved: Review application filed by Union of India regarding foreign currency deposits in NRE accounts prior to 31.07.1995.
Summary:
1. The Union of India filed a review application seeking review of an order directing that foreign currency deposits could be made by individuals other than NRI account holders in NRE accounts of NRIs prior to 31.07.1995. The court set aside proceedings based on this statement in the order dated 19.04.2007.
2. The review application claimed a communication gap led to incorrect instructions being conveyed. Reference was made to Exchange Control Manuals and a circular dated 31.07.1995, which specified that NRE accounts could only be credited with foreign currency if tendered in person by the account holder after 31.07.1995.
3. The Exchange Control Manuals of 1987 and 1993 allowed operations on NRE accounts by residents only for withdrawals for local payments, not deposits. The instructions given were deemed incorrect by the Union of India based on these Manuals.
4. The petitioner's counsel argued that prior to 31.07.1995, there was no clear stipulation against deposits in NRE accounts by individuals other than the account holders themselves. The circular of 31.07.1995 was the first to expressly allow deposits.
5. The court agreed with the petitioner's submissions, stating that the instructions given were correct based on the circular of 31.07.1995 and the Exchange Control Manuals. The review application was dismissed.
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2009 (1) TMI 894
The Bombay High Court heard an appeal regarding a substantial question of law related to compliance with RBI instructions by an Authorized Dealer under FERA. The appeal was admitted for adjudication. The question raised was whether an Authorized Dealer could be held liable for FERA violations despite complying with RBI instructions. The Respondent's counsel waived service.
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2008 (12) TMI 851
Issues:
Violation of section 4(1) read with section 23C(1) of FER Act, 1947 - Unauthorized acquisition of foreign currency - Agency relationship in foreign currency transaction - Vicarious liability of director for company's actions.
Analysis:
The judgment delivered by the Appellate Tribunal for Foreign Exchange pertains to two appeals challenging an adjudication order imposing penalties for contravention of section 4(1) read with section 23C(1) of FER Act, 1947. The penalties were imposed on an appellant company and another appellant, a director of the company, for unauthorized acquisition of foreign currency amounting to DM 47,500. The payment was made by M/s. Kaiser Engineers International USA to M/s. A. Knoevenagal West Germany on behalf of the appellants, without the required RBI permission. The appellants argued that the material on record did not establish guilt beyond reasonable doubt, citing precedents such as Shanti Prasad Jain v. Director of Enforcement AIR 1962 SC 1764 and Central Government v. Abdul Mohammed 1988 (17) ECC 96 (Ker.). They contended that the transaction did not involve wrongful acquisition of foreign currency as per the FER Act, 1947.
The appellants further argued that the payment made by M/s. Kaiser Engineers International USA to M/s. A. Knoevenagal Germany did not create a debt against them, and the alleged transaction did not result in an outflow of foreign currency. However, the Tribunal found that the payment, though made by a third party, was for the benefit of the appellants, establishing an agency relationship. The Tribunal cited the Indian Contract Act, emphasizing that an agency can be implied from circumstances, as seen in Chairman, LIC v. Rajeev Kumar Bhaskar [2005] 6 SCC 188. The Tribunal held that the payment without RBI permission amounted to a violation of section 4(1) of the FER Act, 1947, as it was made on behalf of the appellants.
Regarding the director's liability, the Tribunal noted that as a member of the Board of Directors, he was in charge and responsible for the company, leading to vicarious liability under section 23C(1) of the FER Act, 1947. The Tribunal rejected arguments related to contingent debt and upheld the penalties imposed, emphasizing that the same transaction can result in different violations, warranting punishment for each offense committed. Ultimately, the appeals were dismissed for lacking merit, and the impugned order was sustained and affirmed. The pre-deposit amount was directed to be adjusted towards the imposed penalties by the Enforcement Directorate.
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