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FEMA - Case Laws
Showing 741 to 760 of 1378 Records
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2008 (10) TMI 738
Issues:
Appeal against penalty imposed for contravention of FEM Act, 1999 based on receiving payment in India under instructions from abroad. Admissibility of retracted confessional statement and evidence from a note book. Examination of credibility of confessional statement and corroboration required for its validity. Applicability of Indian Evidence Act in FEMA proceedings and the admissibility of evidence. Assessment of evidence in a non-criminal enquiry. Quantum of penalty imposed and its justification.
Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange involved an appeal against a penalty imposed for contravening the FEM Act, 1999 by receiving payments in India under instructions from abroad. The appellant contested the penalty, arguing that the order was solely based on a retracted confessional statement and evidence from a note book, which they claimed did not contain incriminating documents. The appellant further contended that there was no substantial evidence linking them to the alleged transactions, urging for the order to be set aside.
In contrast, the respondent supported the penalty, citing the appellant's confessional statements admitting to receiving and distributing substantial amounts of money under instructions from a person in Abu Dhabi. The respondent argued that the examination of recipients and documentary evidence corroborated the transactions, establishing the contravention conclusively.
The appellant's counsel raised the issue of the admissibility of the retracted confessional statement, citing legal principles regarding confessions and their evidentiary value. The counsel referred to the Supreme Court's decision emphasizing the voluntary nature of confessions and the need for corroboration to establish their truthfulness. The Tribunal noted that the appellant failed to demonstrate any coercion or vitiating factors in making the statement, and the retraction lacked a timely explanation.
Regarding the evidence from the note book, the appellant's counsel contended that it did not qualify as a book of accounts under the Indian Evidence Act, challenging its admissibility. However, the Tribunal referenced a Supreme Court decision indicating that the provisions of the Evidence Act might not apply in FEMA proceedings, suggesting a different standard for evidence evaluation.
The Tribunal also considered the applicability of evidence rules in non-criminal inquiries, highlighting the wide powers of adjudicating authorities to consider evidence without strict adherence to the Evidence Act. The Tribunal emphasized the importance of fairness in domestic inquiries and the permissibility of acting on circumstantial and confessional evidence.
Ultimately, the Tribunal upheld the impugned order, finding merit in the respondent's arguments and concluding that the penalty imposed was not excessive given the contravention. The appeal was dismissed, directing the appellant to pay the remaining penalty amount within a specified timeframe, failing which the Enforcement Directorate would enforce the payment in accordance with the law.
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2008 (10) TMI 737
Issues Involved:
1. Contravention of sections 8(1), 9(1)(a), 8(1) read with section 64(2) of FERA, 1973.
2. Contravention of sections 6(4), 6(5) read with sections 73(3), 49 of FERA, 1973.
3. Delay in the issuance of show-cause notices.
4. Applicability of the sunset clause under section 49(3) of FEMA, 1999.
5. Vagueness of the show-cause notices.
6. Doctrine of Issue Estoppel.
7. Proportionality of the penalty imposed.
8. Definition and scope of abetment under FERA, 1973.
9. Jurisdiction of the adjudicating authority versus RBI under section 73A of FERA, 1973.
Detailed Analysis:
1. Contravention of sections 8(1), 9(1)(a), 8(1) read with section 64(2) of FERA, 1973:
The individual appellant contended that he acted merely as an agent for an NRI, Deepak Bahari, and deposited money in Bahari's NRE accounts as per his instructions. He argued that in the absence of mens rea, he could not be held guilty. The Tribunal, however, noted that the individual appellant admitted to making several deposits in the NRE accounts while Bahari was not in India, thus establishing contravention of sections 9(1)(b) and 9(1)(d) of FERA, 1973.
2. Contravention of sections 6(4), 6(5) read with sections 73(3), 49 of FERA, 1973:
The appellant bank was found to have accepted large foreign currency deposits in NRE accounts without verifying the presence of the account holder in India, violating RBI guidelines. The Tribunal held that the bank's actions contravened sections 6(4), 6(5), and 8(1) of FERA, 1973, as the bank failed to act with due diligence and care.
3. Delay in the issuance of show-cause notices:
The appellant bank argued that the delay in issuing show-cause notices vitiated the proceedings. However, the Tribunal noted that FERA, 1973, does not prescribe a specific period for initiating prosecution and that what constitutes a "reasonable" period depends on the facts of each case. The Tribunal found no evidence of acquiescence or waiver by the Enforcement Directorate and rejected the argument.
4. Applicability of the sunset clause under section 49(3) of FEMA, 1999:
The appellant bank contended that the proceedings were initiated after the expiry of the sunset period mentioned in section 49(3) of FEMA, 1999. The Tribunal rejected this argument, stating that the show-cause notices were issued before the sunset period expired, and the commencement of adjudication proceedings was valid.
5. Vagueness of the show-cause notices:
The appellant bank argued that the show-cause notices were vague and did not disclose any lapses on its part. The Tribunal found this argument to be fallacious and held that the notices were sufficiently clear in stating the contraventions.
6. Doctrine of Issue Estoppel:
The appellant bank argued that the proceedings were barred by the doctrine of Issue Estoppel, as it had been exonerated in earlier proceedings involving similar charges. The Tribunal rejected this argument, noting that the principle of Issue Estoppel requires the same issue to have been distinctly raised and decided in earlier proceedings, which was not the case here.
7. Proportionality of the penalty imposed:
The individual appellant contended that the penalty was disproportionate. The Tribunal, however, held that the penalties imposed were not excessive or harsh when compared to the amounts involved in the contraventions.
8. Definition and scope of abetment under FERA, 1973:
The Tribunal referred to section 107 of the Indian Penal Code to define abetment, which includes instigation, conspiracy, or intentional aid. The Tribunal found that the appellant bank's actions constituted abetment, as it accepted large foreign currency deposits without verifying the presence of the NRE account holder, thereby facilitating the contravention of FERA, 1973.
9. Jurisdiction of the adjudicating authority versus RBI under section 73A of FERA, 1973:
The appellant bank argued that only the RBI could impose penalties for violations of sections 6(4) and 6(5) under section 73A of FERA, 1973. The Tribunal rejected this argument, stating that section 73A is an additional power granted to RBI and does not affect the adjudicating authority's power to take action under sections 50 and 51.
Conclusion:
The Tribunal dismissed the appeals, affirming the adjudication orders and the penalties imposed. The pre-deposit amounts, if any, were to be appropriated towards the penalty, and the appellants were permitted to deposit the penalty amounts as per the adjudication orders.
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2008 (10) TMI 736
Issues Involved:
1. Compliance with Reserve Bank of India (RBI) conditions.
2. Alleged contravention of Foreign Exchange Regulation Act (FERA) provisions.
3. Validity of the Show Cause Notice (SCN).
4. Mens rea and technical violation.
5. Quantum of penalty.
Issue-wise Detailed Analysis:
1. Compliance with Reserve Bank of India (RBI) conditions:
The appellant company, M/s. Cox & Kings (India) Ltd., was alleged to have failed to comply with the conditions laid down in the license issued by the RBI while releasing foreign exchange. The specific condition under scrutiny was Condition no. (iv) of para 11 of the FLM, which mandates that the sale of foreign exchange should be made only on personal application and identification of the traveler. The appellant company released foreign exchange in cash and travelers cheques without obtaining applications or identification from the passengers, which was a clear violation of the RBI guidelines.
2. Alleged contravention of Foreign Exchange Regulation Act (FERA) provisions:
The appellant was found guilty of contravening Sections 7 and 49 of FERA, 1973, read with paragraph 8A 1 (ii) item XV of Annexure 1 to Chapter 8 of ECM, and paragraph 11 of the FLM read with Section 73 (3) of FERA 1973. The contravention involved releasing foreign exchange without proper documentation and identification, which was admitted by the company's manager and financial controller during the investigation. The preparation or attempt to commit contravention of FERA provisions is punishable under Section 64 of the Act.
3. Validity of the Show Cause Notice (SCN):
The appellant argued that the SCN did not explicitly mention "preparation" or "attempt" to commit the offense. However, the tribunal held that the language of the SCN was sufficiently clear, and any omission did not mislead the appellant or result in a failure of justice. The Supreme Court's precedent in Virendra Kumar v. State of U.P. was cited to support that an error in framing the charge does not vitiate the trial if the accused was aware of the basic ingredients of the offense and had a fair chance to defend themselves.
4. Mens rea and technical violation:
The appellant contended that the violation was technical and lacked mens rea. However, the tribunal rejected this argument, stating that regulatory contraventions under FERA, 1973, impose strict liability, and mens rea is presumed. The Supreme Court's judgment in The Chairman, SEBI v. Shriram Mutual Fund & Anr. was cited, which held that penalty is attracted as soon as the contravention of the statutory obligation is established, irrespective of the intention behind the violation.
5. Quantum of penalty:
The tribunal found the penalty of Rs. 10,000/- imposed by the Adjudicating Officer to be commensurate with the violations. The penalty was deemed necessary to create a deterrent effect against the violation of regulatory statutes. The appellant's argument that the penalty was harsh and excessive was dismissed, and the tribunal upheld the penalty as appropriate and justified.
Conclusion:
The tribunal concluded that the appellant company had rightly been held guilty by the Adjudicating Officer for contravening the provisions of FERA and the RBI guidelines. The penalty imposed was found to be appropriate and necessary to deter future violations. The appeal was dismissed, and the penalty amount already deposited by the appellant was ordered to be appropriated towards the penalty.
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2008 (9) TMI 1047
Issues:
Violation of section 8(3) r/w section 68(1) of FR Act, 1973 - Failure to furnish evidentiary proof of utilization of foreign exchange remitted. Appeal for penalty imposed by Assistant Director, Enforcement Directorate.
Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi, involved appeals against a penalty imposed on the individual appellant and the appellant company for not providing evidence of utilizing foreign exchange remitted, contravening section 8(3) r/w section 68(1) of FR Act, 1973. The appellants sought adjournment but later requested disposal on merit. As per FEMA 1999, appeals must be disposed of within 180 days. The Tribunal decided to finalize the appeals on merit after granting full dispensation.
The appellant company claimed to have acquired foreign exchange for training its officials by a Taiwan-based company. They argued that the training was completed within the visa period by working day and night, utilizing the remitted foreign exchange for training, boarding, and lodging expenses. They contended that the impugned order lacked evidence, making it illegal, void, and against natural justice principles. On the contrary, the respondent argued that the appellant company released foreign exchange for training four officials for 45 days but only sent two officials for 14 days, without confirmation of training completion by the Taiwan company. The respondent claimed a clear contravention of FER Act provisions.
The Tribunal noted that foreign exchange was released to the appellant company for training four officials for 30 to 45 days, but only two officials were sent for 14 days, indicating a discrepancy. As the number of officers sent for training and the duration were less than the acquired and remitted foreign exchange, the impugned order was upheld, and the appeals were dismissed for lack of merit. The appellants were given seven days to deposit the penalty amount; otherwise, the Enforcement Directorate could recover it according to the law.
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2008 (9) TMI 1046
Issues:
1. Imposition of penalty for failure to furnish evidentiary proof of utilization of foreign exchange.
2. Violation of principle of natural justice in passing the impugned order.
3. Failure to provide evidentiary proof of import or utilization of foreign exchange.
4. Interpretation and application of sections 8(3) and 8(4) of FER Act, 1973.
5. Burden of proof on the person acquiring foreign exchange.
6. Dismissal of appeals due to lack of merit.
Detailed Analysis:
1. The Appellate Tribunal for Foreign Exchange heard appeals against an adjudication order imposing a penalty on the appellants for not providing evidence of utilizing foreign exchange acquired and remitted, contravening sections 8(3) and 8(4) of the FER Act, 1973. The appellants did not take steps to prosecute the appeals initially but later requested disposal on merit. The Tribunal considered the provisions of FEMA 1999 requiring appeals to be disposed of within 180 days and granted full dispensation to hear the appeals.
2. The appellants argued that the impugned order violated the principles of natural justice by not allowing cross-examination of witnesses and wrongly attributing the foreign exchange remitted abroad to the individual appellant, who opened the Letter of Credit (L/C), instead of the actual users of the imports. The Tribunal considered these contentions alongside the respondent's argument that the appellants failed to provide evidence of import or utilization of the foreign exchange as required by law.
3. The respondent contended that although the individual appellant opened the L/C for importing copper scrap, the actual users were different parties, and no evidence was presented to show the proper utilization of the remitted foreign exchange. It was highlighted that the appellants did not inquire about non-shipment of goods or take steps to repatriate the funds transferred through the L/C to the foreign importer, leading to a clear contravention under sections 8(3) and 8(4) of the FER Act, 1973.
4. The Tribunal analyzed sections 8(3) and 8(4) of the FER Act, 1973, emphasizing the legal obligation on individuals acquiring foreign exchange to use it for the intended purpose or surrender it within the specified time. It noted that the burden of proof lies with the person prosecuted for contravention, requiring them to demonstrate the proper use of the foreign exchange. In this case, the appellants failed to provide any evidentiary proof of utilizing the foreign exchange, leading to the presumption that it was not used for the intended purpose.
5. As per section 71(2) of the FER Act, the burden of proof rested on the appellants to show the lawful utilization of the foreign exchange, which they failed to do. The Tribunal concluded that the appellants did not present any material to discharge their statutory burden or rebut the adverse presumption under section 8(4) of the Act. Consequently, the impugned order was upheld as the appellants could not demonstrate the proper utilization of the foreign exchange.
6. Ultimately, the appeals were dismissed for lacking merit, and the appellants were given seven days to deposit the respective penalty amounts. Failure to comply would result in the Enforcement Directorate recovering the penalties in accordance with the law.
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2008 (9) TMI 1045
Issues:
Violation of provisions of section 8(1) of the Foreign Exchange Regulation Act, 1973 by selling foreign exchange without permission.
Analysis:
The appeal was filed against an Adjudication Order imposing a penalty for contravention of section 8(1) of the Foreign Exchange Regulation Act, 1973. The appellant, B.D. Gupta, was charged with selling foreign exchange to Arun Kumar without the permission of the Reserve Bank of India. The appellant admitted to selling U.S. $7,000 to $8,000 to Arun Kumar under instruction from M.P. Gupta. Both Arun Kumar and M.P. Gupta corroborated this in their statements. The appellant argued that his confession was made under coercion to avoid arrest and lacked corroboration. However, the tribunal found the confession to be voluntary and supported by evidence, leading to the appellant being held guilty by the Adjudicating Officer.
The legal position under section 8(1) of the FER Act, 1973 was discussed. The appellant's guilt was established through his confession and corroborating statements. The burden of proving coercion in the confession lay with the appellant, which he failed to discharge. The tribunal cited precedents to emphasize that retracted confessions can be accepted if proven voluntary and supported by evidence, which was the case here. The appellant's denial of the exact amount of foreign exchange sold was refuted by the confession and corroborating evidence, leading to the confirmation of charges against him.
Regarding the quantum of penalty, the appellant's financial and health conditions were considered. Being a senior citizen with no income source and suffering from critical ailments, the tribunal reduced the penalty from Rs. 50,000 to Rs. 30,000 to achieve justice. The appellant was directed to pay the reduced penalty within 15 days. The appeal was partly allowed, and failure to pay the penalty would result in recovery by the respondent in accordance with the law.
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2008 (9) TMI 1044
The Appellate Tribunal for Foreign Exchange in New Delhi dismissed an appeal against an adjudication order imposing a penalty for contravention of FER Act, 1973. The appellant failed to comply with the mandatory pre-deposit requirement, leading to the appeal's dismissal. The tribunal had allowed the appellant to deposit 20% of the penalty amount, but non-compliance resulted in the dismissal of the appeal.
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2008 (9) TMI 1043
Issues:
Violation of Section 18(2) and 18(3) of FER Act, 1973 - Failure to realize and repatriate outstanding export proceeds.
Responsibility of the appellant as Managing Director of the noticee company.
Vicarious liability of the appellant under Section 68 of FER Act, 1973.
Analysis:
The appeal was filed against an Adjudication Order imposing a penalty on the appellant for failure to realize and repatriate outstanding export proceeds in violation of Section 18(2) and 18(3) of FER Act, 1973. The appellant contested the order, claiming lack of evidence to prove his role in the export business of the noticee company. The appellant argued for quashing the order due to the absence of proof of the requisite ingredients of the Act. The respondent, on the other hand, contended that the appellant, as the Managing Director of the noticee company, was responsible for the export proceeds and thus liable under the FER Act, 1973.
The Tribunal considered the arguments presented by both sides. The appellant denied actively managing the export business of the noticee company during his tenure as Managing Director. However, the Tribunal noted that there was insufficient evidence to support this claim, and mere assertions were not enough to disprove the appellant's responsibility. Citing legal precedents, the Tribunal emphasized that a Managing Director is typically in charge of a company and responsible for its business conduct. The Tribunal highlighted the importance of necessary averments in establishing vicarious liability and the need for such allegations to be clearly outlined in the complaint.
Referring to the Show Cause Notice issued to the appellant, the Tribunal found that it clearly charged the appellant with vicarious liability for the company's actions. Despite being aware of his position and the allegations against him, the appellant failed to provide any evidence to refute his responsibility for the export proceeds. The Tribunal emphasized the significance of disclosing internal management arrangements, especially in cases involving potential criminal liability. It was noted that the appellant did not avail himself of the escape route provided in the Act, further strengthening the case for his liability.
In conclusion, the Tribunal upheld the impugned order, stating that it did not contain any errors and should be maintained. The appeal was deemed to lack merit and was dismissed accordingly. The Tribunal emphasized the seriousness of the matter and the appellant's failure to provide necessary disclosures regarding the management of the noticee company, leading to the rejection of his arguments against liability under Section 68 of FER Act, 1973.
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2008 (9) TMI 1042
Issues:
1. Imposition of penalty under FEMA and FERA for non-realization of export proceeds.
2. Time limitation for initiating adjudication proceedings under FERA and FEMA.
3. Burden of proof in cases of fraudulently obtained signatures.
4. Obligations of a director in realizing outstanding export proceeds.
5. Interpretation of Sections 18(2) and 18(3) of FER Act, 1973.
6. Standard of reasonableness in efforts to realize export proceeds.
7. Director's responsibility in company transactions.
8. Quantum of penalty for non-compliance with export proceeds regulations.
Analysis:
1. The judgment involves an appeal against a penalty imposed for contravention of FEMA and FERA provisions due to non-realization of export proceeds. The appellant, a director of the company, was held responsible for the outstanding dues amounting to Rs. 2,36,35,851 from exports made by the company in 1997. The appellant argued that his signatures were obtained fraudulently and that he was not involved in the day-to-day business of the company.
2. The appellant raised a defense based on the time limitation for initiating adjudication proceedings under FERA and FEMA. However, the Tribunal found that the proceedings were initiated within the prescribed period as per the relevant Acts, dismissing the appellant's argument regarding the time-barred nature of the proceedings.
3. The burden of proving that the signatures were obtained fraudulently rested on the appellant. Despite claiming mental health issues and fraudulent activities by others, the appellant failed to provide sufficient evidence to support his assertions, leading to the rejection of his defense on this ground.
4. As a director of the company during the relevant period, the appellant was obligated to take reasonable efforts to realize the outstanding export proceeds. The Tribunal noted that the appellant's resignation after the export transactions did not absolve him of this responsibility, especially considering the substantial amount involved.
5. The judgment delved into the interpretation of Sections 18(2) and 18(3) of the FER Act, 1973, highlighting the obligations and presumptions regarding the realization of export proceeds within the prescribed period. The Tribunal emphasized that the presumption under Section 18(3) is rebuttable, but the appellant failed to prove sincere efforts to repatriate the export proceeds.
6. The standard of reasonableness in efforts to realize export proceeds was discussed, emphasizing that the appellant's lack of demonstrable efforts led to the conclusion that he had not met the prescribed legal duty as an exporter to make reasonable attempts to recover the outstanding dues.
7. The judgment underscored the director's responsibility in company transactions, emphasizing that directors are exclusively empowered to manage company affairs and are responsible for such management. The appellant's claim of being ignorant of the export transactions was refuted based on his role as a director during the relevant period.
8. Finally, the Tribunal upheld the quantum of penalty imposed on the appellant, considering the gravity of the offense and the substantial amount involved. The appellant was directed to deposit the penalty amount within a specified timeframe, failing which the respondent could recover the same in accordance with the law. The appeal was dismissed based on the findings and analysis presented in the judgment.
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2008 (9) TMI 1000
Issues Involved:
The issues involved in this case are the violation of natural justice due to lack of cross-examination and the question of territorial jurisdiction for filing a writ petition.
Violation of Natural Justice:
The Writ Petition challenged the Order of the Appellate Tribunal for Foreign Exchange, alleging a violation of natural justice as the Petitioner was not allowed to cross-examine the sole witness whose testimony led to adverse orders by the Special Director of Enforcement, Ministry of Finance.
Territorial Jurisdiction for Writ Petition:
A Preliminary Objection was raised regarding the territorial jurisdiction for filing the writ petition, with the Respondent arguing that the Bombay High Court should have jurisdiction since the Petitioner resides and conducts business there. The Petitioner, however, relied on the situs of the Appellate Tribunal in Delhi. The Court found the Preliminary Objection to be well-founded, emphasizing that the significant part of the cause of action should arise within the territorial sway of the chosen Court.
Legal Precedents and Jurisdictional Clarifications:
Various Division Benches of the Delhi High Court, along with legal precedents, clarified that the High Court should not exercise jurisdiction solely based on the location of the Tribunal within its boundaries. The Court highlighted the importance of the cause of action and the doctrine of forum conveniens in determining the appropriate jurisdiction for a writ petition.
Applicability of FEMA and Supreme Court Ruling:
Section 35 of the Foreign Exchange Management Act, 1999 allows aggrieved parties to file appeals to the High Court, specifying the relevant jurisdiction based on residence or place of business. The Court cited a Supreme Court ruling in Ambica Industries case, emphasizing that the decision of one High Court is binding only within its jurisdiction, preventing forum shopping and judicial anarchy.
Judgment and Conclusion:
The Court rejected the Writ Petition on the grounds of lack of territorial jurisdiction, granting liberty to the Petitioner to approach the appropriate High Court for further proceedings. The decision was based on both general principles outlined in legal precedents and the specific provisions of Section 35 of FEMA.
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2008 (9) TMI 989
Issues Involved:
1. Applicability of Section 56 of the Foreign Exchange Regulations Act, 1973 for non-compliance of summons under Section 40(3).
2. Whether the petitioner's responses to summons constituted compliance or evasion.
3. Admissibility of further summons issued after the filing of the complaint.
4. Consideration of quashing the proceedings based on the facts and law.
Issue-wise Detailed Analysis:
1. Applicability of Section 56 of the Foreign Exchange Regulations Act, 1973 for non-compliance of summons under Section 40(3):
The petitioner argued that Section 56 of the Act, which deals with offences involving specific amounts or values, should not apply to non-compliance with summons under Section 40(3) since it cannot be computed in terms of value or amount. The court referred to the Supreme Court's judgment in "Enforcement Directorate and another v. M.Samba Siva Rao and others" (AIR 2000 SC 2128), which held that non-compliance with summons under Section 40 falls within the purview of Section 56. The court concluded that Section 56 applies even if no amount or value is involved in the contravention.
2. Whether the petitioner's responses to summons constituted compliance or evasion:
The petitioner contended that she had responded to the summons by seeking time due to health issues and had provided necessary documents like her passport and bank statements. The court examined the complaint and found that the petitioner had consistently sought time to appear due to illness and had submitted medical certificates. The court noted that the petitioner had not refused or disobeyed the summons but had shown her willingness to cooperate. Therefore, the court determined that there was no prima facie case of refusal or disobedience of the summons.
3. Admissibility of further summons issued after the filing of the complaint:
The respondent issued further summons after filing the complaint, which the petitioner complied with by appearing before the authorities, leading to her arrest and judicial custody. The court found merit in the petitioner's argument that the issuance of further summons and her compliance could be seen as condonation of any earlier non-appearance. The court referenced the Supreme Court's decision in a similar case, where the question of law was kept open due to the petitioner's subsequent compliance.
4. Consideration of quashing the proceedings based on the facts and law:
The court referred to the guidelines for quashing proceedings established by the Supreme Court in "State of Haryana and Others V. Bhajan Lal and Others" (1992 Supp (1) SCC 335). It found that the allegations in the complaint did not constitute an offence under Section 40(3) of the Act and continuing the proceedings would amount to an abuse of the process of the court. Despite the trial having commenced, the court held that it could exercise its inherent power under Section 482 Cr.P.C. to secure the ends of justice and prevent abuse of the court's process.
Conclusion:
The court quashed the proceedings pending against the petitioner in E.O.C.C.No.70 of 1996, finding that the petitioner's responses to the summons did not constitute non-compliance, and the subsequent summons and compliance indicated condonation of any earlier non-appearance. The court emphasized the importance of preventing abuse of the judicial process and ensuring justice.
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2008 (9) TMI 852
Stay/Dispensation of pre-deposit - Financial hardship - Clandestine banking activities - Held that:- the financial position of the petitioner should be such as can satisfy the tribunal that in case applicant is held liable, he will be in a position to deposit the amount immediately. So far as the contention of the petitioner that he was not served with the notice of personal hearing is concerned it being a question of fact will be considered by the tribunal at the final hearing of the appeal. So far as the contention of the petitioner that it is not established that at the relevant time Tiger Memon was not residing in India is concerned, goning through the record there is sufficient material on record to show that the petitioner was dealing in money with persons who were not residing in India. The record reveals that two brothers of Tiger Memon were living in Dubai and were collecting money there in foreign currency. It is also on record that in 1992 Tiger Memon also went to Dubai.
Appeal dismissed. The litigant like petitioner cannot be helped in extraordinary jurisdiction of this Court under Article 226 of the Constitution of India.
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2008 (8) TMI 1040
Issues Involved:
1. Contravention of sections 9(1)(d), 8(3), and 8(4) read with section 64(2) of the Foreign Exchange Regulation Act, 1973.
2. Validity of confessional statements and their retraction.
3. Status of Rajnikant Kedia as a non-resident.
4. Abetment in mis-declaration of imported goods.
5. Quantum of penalty imposed.
Issue-wise Detailed Analysis:
1. Contravention of sections 9(1)(d), 8(3), and 8(4) read with section 64(2) of the Foreign Exchange Regulation Act, 1973:
The appellant was held guilty of making a payment of Rs. 36,00,000 to D.C. Shah on behalf of Rajnikant Kedia, a non-resident, without the permission of the RBI, thus violating section 9(1)(d). Additionally, the appellant was found to have abetted M/s. Varun International Trading Corporation in mis-declaring goods under sections 8(3) and 8(4) read with section 64(2). The mis-declaration involved under-invoicing the value, quantity, and quality of imported dyes.
2. Validity of Confessional Statements and Their Retraction:
The appellant argued that his confessional statement was involuntary, given under coercion, and promptly retracted. However, the Tribunal found no evidence supporting the claim of coercion. The retraction was deemed an afterthought, unsupported by documentary evidence. The Tribunal cited Supreme Court precedents, asserting that retracted confessional statements could be used as substantive evidence if corroborated by other evidence. In this case, the appellant's retracted statement was corroborated by statements from co-noticees and documentary evidence, thus deemed valid.
3. Status of Rajnikant Kedia as a Non-Resident:
The appellant contended that Rajnikant Kedia was not a non-resident during the relevant period. However, the Tribunal found that Kedia had an NRE account, which can only be maintained by a person resident outside India. There was no evidence that Kedia had applied to redesignate his NRE account as a resident account. Thus, the Tribunal concluded that Kedia was a non-resident during the relevant period.
4. Abetment in Mis-Declaration of Imported Goods:
The appellant was charged with abetting M/s. Varun International and others in mis-declaring the imported goods. The Tribunal referred to the definition of 'abetment' under section 107 of the Indian Penal Code, which includes instigation, conspiracy, or intentional aid. The Tribunal found that the appellant had actively facilitated the mis-declaration by making payments and purchasing the goods, knowing the nature of the deal. This active complicity established the charge of abetment.
5. Quantum of Penalty Imposed:
The Tribunal found the penalty of Rs. 1,89,000 commensurate with the gravity of the offense. The appellant's argument that the burden of proof was not met was dismissed. The Tribunal emphasized that in economic offenses, the burden of proof need not reach mathematical precision. The evidence provided established a high degree of probability that justified the penalty. The pre-deposited amount was ordered to be appropriated towards the penalty.
Conclusion:
The Tribunal confirmed and upheld the adjudication order, finding the charges under sections 9(1)(d), 8(3), and 8(4) read with section 64(2) of the Foreign Exchange Regulation Act, 1973, fully proved against the appellant. The appeal was dismissed, and the penalty was deemed appropriate for the offense.
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2008 (8) TMI 1039
Issues:
Violation of FER Act, 1973 - Failure to realize and repatriate outstanding export products - Vicarious liability of appellant - Quantum of penalty.
Analysis:
Violation of FER Act, 1973:
The appeal was against an adjudication order imposing a penalty for the failure to realize and repatriate export proceeds, contravening sections 18(2) and 18(3) r/w section 68 of FER Act, 1973. The appellant argued that he was not responsible for the affairs of the noticee company during the relevant time, citing the Companies Act and a Supreme Court decision. The respondent contended that the appellant, as an executive director, was involved in export decisions. The tribunal noted the appellant's role in the company before 1997, supported by a letter, and emphasized the burden of proof on the appellant under the Evidence Act.
Vicarious Liability of Appellant:
The tribunal discussed the concept of "officer who is in default" under the Companies Act and the vicarious liability provision in section 68 of the FER Act. It highlighted that the appellant was an officer of the noticee company during the relevant period, emphasizing that the court will not interpret statutes with reference to unrelated laws. The tribunal rejected the appellant's argument that he was not responsible for the company's conduct, as the show cause notice clearly stated his role in the company's day-to-day business.
Quantum of Penalty:
Regarding the quantum of penalty, the tribunal found it neither excessive nor harsh considering the amount involved in the contravention. The tribunal dismissed the appeal, upholding the penalty imposed. The appellant was directed to deposit the balance amount of the penalty within a specified period, failing which the Enforcement Directorate could realize it in accordance with the law.
In conclusion, the tribunal dismissed the appeal, upholding the penalty imposed on the appellant for the violation of the FER Act, 1973. The decision was based on the appellant's vicarious liability and involvement in the company's affairs during the relevant period, as established by evidence presented. The tribunal found the penalty amount reasonable and directed the appellant to fulfill the payment within the stipulated timeframe to avoid further enforcement actions.
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2008 (8) TMI 1038
Issues:
Violation of provisions of Section 9(1)(d) r/w 68(1) of the Foreign Exchange Regulation Act, 1973.
Analysis:
1. The appeals were filed against an Adjudication Order imposing penalties for contravention of FERA provisions. The appellants made partial payment as per Tribunal's order.
2. The charge was for making unauthorized payments to M/s. DFCL on behalf of M/s. Image Securities LLC without RBI permission. The appellants sought consultancy services for NRI investment promotion in Tamil Nadu.
3. Evidence showed no substantial service by M/s. DFCL, and incriminating documents were found during a search. Payments were made to DFCL on behalf of Image Securities LLC without RBI approval.
4. The defense argued the payments were independent, not violating FERA. However, evidence indicated a connection between DFCL and Image Securities LLC, with payments made for services not rendered.
5. Section 9(1)(d) of FERA prohibits payments to persons outside India without RBI permission. The new agreement with DFCL was an attempt to circumvent legal obligations.
6. Confessional statements and documents proved the connection between DFCL and Image Securities LLC, despite attempts to argue independence.
7. The Memorandum of Understanding between DFCL and Image Securities LLC couldn't override FERA provisions. Payments were made for services by Image Securities LLC, not DFCL.
8. The manager of DFCL's statements confirmed the appellants' involvement in unauthorized payments for services not rendered.
9. The defense claimed technical violation without mens rea, citing a Supreme Court judgment. However, penalties apply regardless of intention for contraventions of statutory obligations.
10. Despite income tax deductions, the evidence established a violation of FERA provisions. The appellants were found guilty, but the penalty amount was reduced by 50% for fairness.
In conclusion, the appellants were found guilty of contravening FERA provisions by making unauthorized payments. The defense arguments were refuted based on evidence, leading to a partial reduction in the penalty amount imposed. The judgment emphasized strict compliance with regulatory mechanisms under FERA, even in cases of technical violations without mens rea.
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2008 (8) TMI 1037
The appeal was filed against an adjudication order imposing a penalty of Rs. 25,000 for contravention of the FER Act. The appellant did not appear despite multiple notices. The appellant did not comply with the pre-deposit order and the appeal was dismissed for failure to make the required deposit.
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2008 (8) TMI 1036
Issues Involved:
1. Alleged contravention of Section 9(1)(b) and Section 9(1)(d) of the Foreign Exchange Regulation Act (FERA), 1973.
2. Voluntariness and admissibility of the appellant's admissional statement.
3. The impact of the retraction of the admissional statement.
4. The requirement of corroborative evidence.
5. The burden of proof on the Enforcement Directorate.
6. Denial of cross-examination of Jagdish Prasad Karel.
7. Quantum of penalty imposed.
Issue-wise Detailed Analysis:
1. Alleged Contravention of Section 9(1)(b) and Section 9(1)(d) of FERA, 1973:
The appellant was penalized for paying Rs. 12,98,800 to Devkinandan Karel on the instructions of Dilip Shah of Bangladesh, which was considered a violation of Section 9(1)(b) and Section 9(1)(d) of FERA, 1973. The penalty imposed was Rs. 4,00,000 for the contravention of Section 9(1)(b) and Rs. 3,00,000 for the contravention of Section 9(1)(d).
2. Voluntariness and Admissibility of the Appellant's Admissional Statement:
The appellant argued that his admissional statement was made under threat, duress, and coercion. However, the Tribunal found no evidence on record to support these allegations. It was emphasized that the voluntary nature of any statement made before Enforcement authorities is a sine qua non for its admissibility. The Tribunal referred to the Supreme Court's observations in K.T.M.S. Mohd. v. Union of India, which stressed that the burden is on the maker of the statement to establish that it was obtained through improper means.
3. The Impact of the Retraction of the Admissional Statement:
The Tribunal noted that the retraction of the admissional statement does not automatically render it inadmissible. The retracted confession can still form the basis of conviction if found to be voluntary and true. The Tribunal cited K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, where the Supreme Court held that a retracted confession could be relied upon if corroborated by other evidence.
4. The Requirement of Corroborative Evidence:
While the appellant relied on Mohtesham Mohd. Ismail v. Spl. Director, Enforcement Directorate, which emphasized the need for corroboration, the Tribunal found that the factual position in the present case did not necessitate stricter application of this rule. The Tribunal referred to Naresh J. Sukhawani v. Union of India, where the Supreme Court held that corroboration is not always necessary if the admissional statement is voluntary and true.
5. The Burden of Proof on the Enforcement Directorate:
The appellant argued that the Enforcement Directorate failed to prove the case beyond a reasonable doubt. However, the Tribunal noted that while the burden of proof is on the Enforcement Directorate, it does not need to be stretched to mathematical precision. The Tribunal referred to Collector of Customs v. D. Bhoormull, which stated that the prosecution is not required to prove its case with absolute certainty, but rather to a degree that a prudent person would believe in the existence of the fact in issue.
6. Denial of Cross-Examination of Jagdish Prasad Karel:
The appellant's demand for cross-examination of Jagdish Prasad Karel was denied. The Tribunal cited Transmission Corporation of AP Ltd. v. Ramakrishna Rice Mills, which held that the demand for cross-examination must be supported by sound reasons, and its denial does not necessarily violate the principles of natural justice.
7. Quantum of Penalty Imposed:
The Tribunal found that the amount involved in the contravention was more than the quantum of penalty imposed. It did not consider the penalty to be excessive or harsh. The Tribunal referred to Chairman, SEBI v. Sriram Mutual Fund, where the Supreme Court emphasized that penalties under statutory regulations should be imposed to secure strict compliance without requiring proof of mens rea.
Conclusion:
The Tribunal sustained and maintained the adjudication order, dismissing the appeal for lack of merits. The appellant was directed to deposit the remaining penalty amount within a week from the date of receipt of the order, failing which the respondent could recover the same in accordance with the law.
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2008 (8) TMI 1035
Issues:
Challenge to adjudication order for contravention of Section 18(2) read with 18(3) FER Act regarding failure to repatriate export proceeds.
Analysis:
The Appellate Tribunal for Foreign Exchange considered an appeal challenging an adjudication order imposing a penalty of Rs. 3,50,000 on the appellant for not taking reasonable steps for repatriation of export proceeds, as required by Section 18(2) read with 18(3) of the FER Act. The appellant had already pre-deposited the penalty amount. The Tribunal proceeded with the final disposal of the appeal on merits.
The Tribunal heard arguments from both parties and reviewed the Show Cause Notice issued to the appellant, alleging failure to repatriate export proceeds. The legal obligation of an exporter under Section 18(2) read with 18(3) of the FER Act was emphasized, stating that if payment for exported goods is not received within the prescribed period, it is presumed that the exporter did not take reasonable steps to receive the payment.
The Tribunal examined the concept of "reasonable" steps required from exporters, citing legal definitions that highlight the need for fairness and suitability in the given circumstances. The Tribunal analyzed the specific export transactions of the appellant, focusing on three sets of Goods Received Intimations (GRIs) with varying outcomes in terms of payment realization.
The Tribunal found that while some GRIs were realized or pending with the RBI for write-off or extension requests, three GRIs remained unrealized. The appellant's argument regarding pending requests for write-off or extension was not considered sufficient to absolve the appellant of the failure to repatriate proceeds. Consequently, the Tribunal held the appellant guilty of contravening Section 18(2) read with 18(3) concerning the price of the three GRIs.
In its decision, the Tribunal partly allowed the appeal, reducing the penalty imposed on the appellant to Rs. 1 lakh from Rs. 3,50,000. The Tribunal directed that the penalty amount could be adjusted against the pre-deposited sum, with any remaining amount to be returned to the appellant by the Enforcement Directorate within two weeks from the date of the order.
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2008 (8) TMI 1034
Issues Involved:
1. Contravention of Section 8(1) FER Act, 1973.
2. Contravention of Section 9(1)(a) and Section 19(1)(e) FER Act, 1973.
3. Contravention of Section 9(1)(f)(i) FER Act, 1973.
4. Principles of natural justice and service of Show Cause Notices.
5. Validity of retracted statements and their impact on the judgment.
Detailed Analysis:
1. Contravention of Section 8(1) FER Act, 1973:
The appellant was alleged to have "otherwise acquired and thereafter transferred US dollars 62,793" to the bank account of M/s Greenland Corporation, Japan, and failed to offer the same for sale within three months of his return to India in April 1984, violating Section 8(1) FER Act, 1973 (Show Cause Notice No. T-4/36-B/86-(SCN-IV)). Additionally, he was accused of maintaining an account with M/s Greenland Corporation where Japanese Yen 7236950 was debited without RBI's permission and failing to surrender Japanese Yen 7236950 and US dollars 20,000 within three months of his return to India (Show Cause Notice No. T-4/36-B/86-(SCN-V)).
2. Contravention of Section 9(1)(a) and Section 19(1)(e) FER Act, 1973:
The appellant was penalized for making payments of US dollars 99539.60 and Singapore dollar 762 to different persons without RBI's permission and for holding JCP bonds of US dollars 10000 even after acquiring the status of a person resident in India (Show Cause Notice No. T-4/36-B/86-(SCN-VIII)). This was seen as a contravention of Section 9(1)(a) and Section 19(1)(e) FER Act, 1973.
3. Contravention of Section 9(1)(f)(i) FER Act, 1973:
The appellant was found to have received Rs. 16,26,500 as consideration and in lieu of payment of US dollars 75000 and Singapore dollar 61663.40 from persons resident outside India, which was a violation of Section 9(1)(f)(i) FER Act, 1973 (Show Cause Notice No. T-4/36-B/86-(SCN-VII)).
4. Principles of Natural Justice and Service of Show Cause Notices:
The appellant argued that the Show Cause Notices were not served on him, violating principles of natural justice. However, the Tribunal found that the notices were sent to the address provided by the appellant, fulfilling the legal duty of the Enforcement Directorate. The service by affixation under Rule 10(c), Adjudication Proceedings and Appeal Rules, 1974, was deemed an accepted and recognized mode of service under the Foreign Exchange Regulation Act, 1973. Thus, the Tribunal dismissed the claim of violation of natural justice.
5. Validity of Retracted Statements and Their Impact on the Judgment:
The appellant's statements recorded by the Customs Department and the Enforcement Directorate were retracted. The Tribunal noted that retracted statements could still be considered if not proven to be made under threat or coercion. The Tribunal cited several judgments, including K.T.M.S. Mohd. v. UOI and K.I. Pavunny v. Assistant Collector (HQ), to emphasize that retracted confessions could be used as evidence if found voluntary and true. The Tribunal concluded that the appellant's statements were voluntary and true, and the retraction did not benefit the appellant. The burden of proof on the Enforcement Directorate under Section 59(2) FER Act was considered met without requiring mathematical precision, as per the observations in Collector of Customs, Madras v. D. Bhoormull.
Conclusion:
The Tribunal upheld the penalties imposed on the appellant for contraventions of various sections of the FER Act, 1973, dismissing the arguments regarding the appellant's residential status, principles of natural justice, and the validity of retracted statements. The appeal was disposed of on merits, affirming the adjudication order.
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2008 (8) TMI 1033
Issues Involved:
1. Contravention of section 9(1)(f)(i) read with section 68(1) of the Foreign Exchange Regulation Act, 1973.
2. Validity and voluntariness of admissional statements.
3. Burden of proof and standard of evidence required.
4. Appropriateness of the penalty imposed.
Issue-wise Detailed Analysis:
1. Contravention of section 9(1)(f)(i) read with section 68(1) of the Foreign Exchange Regulation Act, 1973:
The appellants were accused of over-invoicing four export consignments, resulting in the receipt of US dollars 64184 from a foreign buyer, M/s. Hezmans, Netherlands, and making a payment of Rs. 25,00,000 in return. The adjudicating authority imposed penalties of Rs. 12,00,000 on the appellant-company and Rs. 2,00,000 on the Director. The appellants argued that the prices in the invoices were correct and not over-invoiced, citing market conditions and negotiations conducted by a middleman, Rajesh Shroff. However, the tribunal found that the admissional statements of Rajesh Shroff and the appellant-Director provided clear evidence of over-invoicing and the subsequent return of the differential amount.
2. Validity and voluntariness of admissional statements:
The appellants claimed that their admissional statements were made under coercion and threat. However, the tribunal noted that there was no evidence to support these claims. The tribunal referred to several Supreme Court judgments, including K.T.M.S. Mohd. v. Union of India, Naresh J. Sukhwani v. Union of India, and State (NCT) Delhi v. Navjot Sandhu alias Afsan Guru, which emphasized that voluntary statements made to enforcement authorities are admissible unless proven to be obtained through coercion or threat. The tribunal concluded that the admissional statements were voluntary and true, as there was no proof of coercion.
3. Burden of proof and standard of evidence required:
The tribunal discussed the burden of proof in quasi-criminal proceedings, citing the Supreme Court judgment in Collector of Customs v. D. Bhoormull. It was noted that the burden of proof on the enforcement agency does not require mathematical precision but should establish a degree of probability that a prudent person may believe in the existence of the fact in issue. The tribunal found that the evidence presented, including the admissional statements and the circumstances of the case, met this standard.
4. Appropriateness of the penalty imposed:
The tribunal considered the amount involved in the contravention and concluded that the penalties imposed were not excessive or harsh. The tribunal referred to the Supreme Court judgment in Chairman, SEBI v. Sriram Mutual Fund, which emphasized the importance of imposing penalties to ensure strict compliance with the law. The tribunal upheld the penalties of Rs. 12,00,000 on the appellant-company and Rs. 2,00,000 on the Director, finding them appropriate given the nature and amount of the contravention.
Conclusion:
The tribunal dismissed the appeals, upholding the adjudication order and the penalties imposed. The appellants were directed to deposit the remaining penalty amounts within a week, failing which the respondent could recover the amounts in accordance with the law.
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