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FEMA - Case Laws
Showing 801 to 820 of 1378 Records
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2008 (6) TMI 639
Issues:
1. Contravention of provisions of the Foreign Exchange Regulation Act, 1973.
2. Validity of confessional statement and corroborating evidence.
3. Search and seizure procedures.
4. Proof of guilt under sections 8(1) and 8(2) of the FERA.
5. Quantum of penalty imposed.
Analysis:
Issue 1: Contravention of FERA Provisions
The appeal was filed against an Adjudication Order imposing a penalty for contravention of sections 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973. The appellant was found guilty of unauthorized sale and purchase of foreign exchange, leading to the confiscation of seized currencies. The appellant admitted engaging in unauthorized transactions, which formed the basis of the charges.
Issue 2: Validity of Confessional Statement and Corroborating Evidence
The appellant retracted the confessional statement, alleging coercion during its recording. However, the Tribunal found the statement corroborated by recovered documents and currencies. The burden to prove coercion was on the appellant, but no substantial evidence was presented to support this claim. The Tribunal cited legal precedents emphasizing the voluntary nature of confessions and the need for corroboration, concluding that the appellant failed to discharge this burden.
Issue 3: Search and Seizure Procedures
The search and seizure actions were conducted lawfully, with proper documentation and witness signatures. The appellant's challenges to the Panchnama's credibility were dismissed, as minor discrepancies in witness statements did not undermine the overall legality of the process. The Tribunal found the search and seizure actions in accordance with the law and dismissed the appellant's objections.
Issue 4: Proof of Guilt under FERA Sections
The Tribunal upheld the charges under sections 8(1) and 8(2) of the FERA, emphasizing the importance of preventing economic offenses that threaten national interests. The Tribunal highlighted that while proof beyond reasonable doubt is required, absolute precision is not necessary. The appellant's guilt was established based on the confessional statement, corroborating evidence, and circumstantial factors, leading to the dismissal of the appeal.
Issue 5: Quantum of Penalty Imposed
The Tribunal considered the gravity of the evidence and the appellant's plea for mercy due to being a senior citizen. Despite the confiscation of foreign exchange, the penalty amount was deemed commensurate with the offense. The Tribunal confirmed the penalty and directed the appellant to pay the balance amount within a specified timeframe, failing which legal action would be taken.
In conclusion, the Tribunal dismissed the appeal, finding the impugned order valid and the penalty justified based on the established contraventions of FERA provisions.
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2008 (6) TMI 638
Issues Involved:
1. Legality, propriety, and correctness of the Adjudication Order.
2. Quantum of penalty imposed.
3. Delay in filing the revision petition.
4. Authorization of the revision petition.
Detailed Analysis:
1. Legality, Propriety, and Correctness of the Adjudication Order:
The revision petition was filed to examine the legality, propriety, and correctness of the Adjudication Order No. ADJ/JIV35-36/99/AKM dated 29th October 1999, passed by the Deputy Director, Enforcement Directorate. The respondent was held guilty for contravention of Sections 8(1), 8(2), and 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973. The tribunal noted that the respondent did not appeal against the order, thereby accepting the conclusion of guilt. Hence, the merits of the impugned order were not discussed further.
2. Quantum of Penalty Imposed:
The revisionist challenged the quantum of penalty, arguing that Section 50 of the Foreign Exchange Regulation Act, 1973, provides for a penalty of up to five times the amount involved. The adjudicating authority imposed a penalty of Rs. 25,000, which was deemed insufficient considering the misconduct and the amounts involved in the contraventions. The tribunal referred to the Supreme Court judgment in Smt. Bachahan Devi v. Nagar Nigam and other cases to discuss the interpretation of statutory language, particularly the use of "shall" and "may." It concluded that the adjudicating officer had abdicated his duty by imposing an inappropriate penalty. Consequently, the penalty was increased to Rs. 2,00,000 for each count in the two Show Cause Notices, totaling Rs. 4,00,000.
3. Delay in Filing the Revision Petition:
The revision petition was filed on 9.4.2001 against the impugned order dated 29.10.1999, resulting in a delay of one year, five months, and twenty days. The tribunal noted that this delay was not explained in any manner whatsoever.
4. Authorization of the Revision Petition:
The revision petition was filed by Shri T.K. Gadoo, DLA, without any authorization, and the revisionist was termed as "Appellant." The tribunal found that the revision petition was filed without proper authorization.
Conclusion:
The tribunal allowed the revision petition and modified the impugned order to increase the penalty from Rs. 25,000 to Rs. 4,00,000. The respondent, who had already deposited Rs. 25,000, was directed to deposit the balance amount of Rs. 3,75,000 within seven days from the date of receipt of the order, failing which the revisionist could recover the same in accordance with the law.
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2008 (6) TMI 579
Issues Involved:1. Violation of Section 18(2) and Section 18(3) of the Foreign Exchange Regulation Act, 1973. 2. Applicability of the Appellate Tribunal's earlier decisions. 3. Presumption of non-recovery of export proceeds under Section 18(3). Summary:Issue 1: Violation of Section 18(2) and Section 18(3) of the ActThis appeal u/s 35 of the Foreign Exchange Management Act, 1999 read with Section 49 thereof and Section 54 of the Foreign Exchange Regulation Act, 1973, challenges the order dated 09.10.2007 by the Appellate Tribunal for Foreign Exchange, which upheld the imposition of a penalty of Rs. 3 Lacs on the appellant for violating Section 18(2) read with Section 18(3) of the Act. The appellant, a former Director of M/s Kwality Jewellers (India) Pvt. Ltd., argued that he had resigned from the company on 01.06.1995 and was not responsible for the non-realisation of export proceeds. However, the adjudicating authority and the Appellate Tribunal found that sufficient efforts were not made to realise the amounts, and the appellant was held responsible for the outstanding proceeds since the exports occurred during his tenure as Director. Issue 2: Applicability of the Appellate Tribunal's earlier decisionsThe appellant contended that the Appellate Tribunal ignored its earlier decisions, specifically the two-member Bench decision in "M/s Leatherage, Kanpur v. Director of Enforcement," which held that no violation of Section 18(2) occurs if an application for extension or offset of export proceeds is pending before the RBI. The appellant argued that the Tribunal should have followed this precedent. However, the Tribunal dismissed this argument, noting that the facts of the present case differed significantly from those in "M/s Leatherage, Kanpur," where bonafide efforts to realise the debt were evident. Issue 3: Presumption of non-recovery of export proceeds under Section 18(3)The court highlighted Section 18(3) of FERA, which presumes that a person has not taken reasonable steps to recover payment for goods if the prescribed period has expired without payment. The appellant failed to rebut this presumption. The court noted the close personal and business relationship between the appellant and the importer, and the lack of meaningful efforts to recover the export proceeds. The appellant's own documents contradicted his claims about the timing of his resignation and his involvement in the company's operations. The court concluded that the appellant's complicity in the failure to realise the export proceeds was evident. Conclusion:The appeal was dismissed with costs of Rs. 10,000/-, affirming the Appellate Tribunal's decision and the penalties imposed for the violation of Section 18(2) and Section 18(3) of the Act.
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2008 (6) TMI 550
Issues:
Appeal against adjudication order under FER Act, 1973 for contravention of Sections 9(1)(b) and 9(1)(d) - Admissibility of admissional statements - Verification of non-residential status - Confiscation of recovered amount - Retraction of admissional statements - Lawful possession of recovered amount - Corroboration of retracted confession.
Analysis:
The appeal before the Appellate Tribunal for Foreign Exchange challenged an adjudication order imposing a penalty and confiscation of recovered funds under the FER Act, 1973 for contravention of specified sections. The appellants contested the basis of the order, primarily arguing against the admissibility of admissional statements that were retracted later. The appellant's counsel contended that the statements were made under questionable circumstances, including coercion and lack of verification of a key individual's non-residential status. However, the opposing counsel supported the impugned order.
The Tribunal noted that the appellants were intercepted with a substantial amount of money, part of which was exchanged between them. Despite claims of handing over money for safekeeping, the possession of a significant sum remained unexplained. The Tribunal addressed the issue of retracted statements, citing legal precedents that allow for the consideration of such statements if found voluntary and true, even without independent corroboration. The Tribunal emphasized the need for examining the voluntariness and truthfulness of retracted confessions in determining guilt.
In evaluating the situation, the Tribunal found no error in the impugned order and dismissed the appeals for lacking merit. The order imposing penalties and confiscation based on admissional statements was upheld, emphasizing the appellants' failure to provide a satisfactory explanation for the possession of the recovered funds. The Tribunal directed the appellants to deposit the respective penalties promptly, warning of enforcement action in case of non-compliance. The judgment underscored the importance of voluntary and truthful statements in legal proceedings, highlighting the significance of corroborative evidence in assessing the reliability of retracted confessions.
Overall, the judgment delved into the nuances of admissibility, voluntariness, and corroboration of statements in the context of the FER Act violations, ultimately affirming the impugned order and emphasizing the legal obligations regarding the possession and explanation of recovered funds in such cases.
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2008 (5) TMI 761
Issues:
- Appeal against adjudication order imposing penalties under FER Act
- Application for dispensation of pre-deposit of penalty
- Application for modification of pre-deposit order
- Legal arguments for modification and dismissal of appeal based on pre-deposit non-compliance
- Interpretation of Section 52(2) FER Act regarding pre-deposit requirements
Analysis:
The judgment pertains to an appeal against an adjudication order imposing penalties under the Foreign Exchange Regulation Act (FER Act). The appellant was penalized for contraventions related to acquiring and selling US dollars and UAE Dhiram without proper authorization. The appellant filed an application for dispensation of pre-deposit of the penalty, citing undue hardship. The Tribunal granted a 75% dispensation but directed the appellant to make a 25% pre-deposit within a specified timeframe, failing which the appeal would be dismissed solely on this ground.
Subsequently, the appellant sought modification of the pre-deposit order, contending that he lacked the financial capacity to comply. The appellant's counsel argued for dispensation of pre-deposit, but the Tribunal highlighted the legal grounds for review and modification, emphasizing the need for error apparent on the face of the record or new evidence. The Tribunal clarified that the pre-deposit order was not interim but a proper order for appeal admission under Section 52(2) of the FER Act.
On the other hand, the respondent's counsel argued for dismissal of the appeal due to non-compliance with the pre-deposit order. The respondent referred to Section 52(5) of the FER Act, which outlines the appeal process and pre-deposit requirements. The Tribunal emphasized the plain language of the statute and cited a Supreme Court judgment to support its interpretation. The appellant's failure to make the pre-deposit within the specified timeframe led the Tribunal to agree with the respondent's arguments and dismiss the appeal.
In conclusion, the Tribunal dismissed the appeal as the appellant failed to make the required pre-deposit of the penalty in compliance with the Tribunal's order. The judgment underscores the importance of adherence to legal procedures and statutory requirements in appeals involving financial penalties under the FER Act.
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2008 (5) TMI 760
Issues Involved:
1. Application for review of dismissal order.
2. Financial inability to make pre-deposit.
3. Jurisdiction and power of the Tribunal under Foreign Exchange Regulation Act, 1973 (FERA).
4. Applicability of Foreign Exchange Management Act, 1999 (FEMA) provisions.
5. Legal principles regarding repeal and re-enactment of statutes.
6. Grounds for review of Tribunal orders.
Issue-wise Detailed Analysis:
1. Application for Review of Dismissal Order:
The appellants filed an application under section 28(2)(f) of FEMA, 1999, seeking recall of the dismissal order dated 11-12-2007 and rehearing of the application for dispensation of pre-deposit. The Tribunal dismissed the appeals for non-compliance with the pre-deposit order dated 8-3-2004, which was upheld by the Hon'ble High Court of Rajasthan. The Tribunal emphasized that the right to appeal, revision, or review is a creature of statute and cannot be claimed as a legal or fundamental right. The Tribunal does not possess the power to review its orders under FERA, 1973, except for correcting clerical errors under section 65 of FERA, 1973.
2. Financial Inability to Make Pre-deposit:
The appellants argued that they were suffering from total financial disability and were unable to make any pre-deposit of the penalty. The Tribunal referred to the Hon'ble Supreme Court judgment in Benara Valves Ltd. v. CCE, stating that mere assertion of undue hardship is insufficient and a factual scenario must be deeply considered. The Tribunal had previously allowed an 80% waiver of the pre-deposit but directed a 20% pre-deposit, which the appellants failed to comply with.
3. Jurisdiction and Power of the Tribunal under FERA, 1973:
The Tribunal highlighted that the proceedings were conducted under FERA, 1973, where the power of review is not available, except for correcting clerical errors. The Tribunal emphasized that the right to review is a substantive right and not a procedural one, and cannot be imported from FEMA, 1999, under which the Tribunal is constituted. The Tribunal referred to the judgment in Garikapati Veeraya v. N. Subbiah Choudhary to support this view.
4. Applicability of FEMA Provisions:
The Tribunal clarified that FERA, 1973, is a self-contained code with substantive and procedural provisions intertwined. The Tribunal rejected the argument that the procedure under FEMA, 1999, should be applied due to the repeal of FERA, 1973. The Tribunal cited section 49(4) of FEMA, 1999, which saves the provisions of the repealed Act, ensuring that all offences committed under FERA, 1973, shall be governed by it as if it had not been repealed.
5. Legal Principles Regarding Repeal and Re-enactment of Statutes:
The Tribunal cited several judgments, including Southern Petrochemical Industries v. Electricity Inspector and Gammon India Ltd. v. Spl. Chief Secretary, to emphasize that rights and liabilities under a repealed statute continue unless the new statute shows a clear intention to vary such rights. The Tribunal concluded that the appeals must be decided under FERA, 1973, as the adjudication order was passed under it.
6. Grounds for Review of Tribunal Orders:
The Tribunal outlined the well-settled grounds for review: (1) error apparent on the face of the record, (2) availability of fresh evidence not available earlier despite due diligence, and (3) similar grounds. The Tribunal found no error apparent on the face of the pre-deposit order dated 8-3-2004 or the dismissal order dated 11-12-2007. The Tribunal referred to the judgments in U.P.S.R.T.C. v. Imtiaz Hussain and Thungabhadra Industries Ltd. v. Government of Andhra Pradesh to support its decision.
Conclusion:
The Tribunal rejected the applications for review of the order dated 11-12-2007 and dismissed the appeals for non-compliance with the pre-deposit order dated 8-3-2004. The Tribunal emphasized that there is no equity in favor of the appellants who did not act bona fide and made no efforts to comply with the pre-deposit order.
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2008 (5) TMI 759
Issues:
1. Imposition of penalty for contravention of Foreign Exchange Regulation Act, 1973.
2. Failure to submit required evidence for import of goods against foreign exchange remittances.
3. Appeal against Adjudication Order.
4. Argument regarding fulfillment of obligations under Section 8(3) and 8(4) of the Act.
5. Discrepancy in reference numbers in certificates submitted by the appellant.
6. Decision to set aside the impugned order and remand the matter for fresh adjudication.
Analysis:
The judgment delivered by Km. Vijay Laxmi, Member, Appellate Tribunal for Foreign Exchange, pertains to appeals filed against an Adjudication Order imposing a penalty of Rs. 40,00,000 on the appellant for contravention of the Foreign Exchange Regulation Act, 1973. The penalty was imposed for not submitting required evidence for import of goods against two foreign exchange remittances. The Tribunal had earlier granted full dispensation in favor of the appellant, and the appeals were taken up for final disposal on merits.
During the hearing, arguments were presented by the appellant's advocate and the respondent's representative. It was noted that two remittances of foreign exchange were made by the appellant without submitting necessary documentary evidence to the authorized dealer. The appellant argued that they had fulfilled their obligations under Section 8(3) and 8(4) of the Act by submitting the required documents, including the exchange copy of the bill of entry.
However, a discrepancy was found in the reference numbers mentioned in the certificates submitted by the appellant. While one certificate matched the details in the Show Cause Notice, another had a reference number that did not align. The Tribunal concluded that the certificates should be considered by the Adjudicating Officer for effective disposal of the matter concerning the actual import of goods. Therefore, the impugned order was set aside, and the matter was remanded back to the Adjudicating Officer for fresh adjudication in accordance with the law.
In the final decision, the impugned order was quashed, and the matter was remanded for fresh adjudication. The Adjudicating Officer was directed to complete the proceedings within six months from the first appearance of the appellants before him. A specific date for appearance before the Adjudicating Officer was set, allowing for further proceedings or the granting of a fresh hearing date at the officer's discretion.
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2008 (5) TMI 698
Issues: Non-compliance with mandatory pre-deposit requirement while filing an appeal against adjudication order imposing penalty for remitting foreign exchange without RBI exemption.
In this judgment by the Appellate Tribunal for Foreign Exchange, the appeal was filed against an adjudication order imposing a penalty for remitting foreign exchange without prior RBI exemption. The appellant failed to appear despite being directed to deposit the penalty amount within 30 days. The respondent requested dismissal of the appeal due to non-compliance. The Tribunal highlighted the mandatory pre-deposit requirement under Section 52(2) of the Act, emphasizing that legal provisions cannot be circumvented to avoid hardship, citing the Nasiruddin v. Sita Ram Agarwal judgment. The Tribunal had previously allowed the appellant to deposit the penalty amount but the appellant failed to comply with the order, showing no genuine effort to meet the conditions. Consequently, the appeal was dismissed for non-compliance with the judicial order, with no equity in favor of the appellant.
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2008 (5) TMI 10
FEMA - Constitutional validity of Section 18(2) and (18(3) of the FERA - Held that A legal provision does not become unconstitutional only because it provides for a reverse burden. - Commercial expediency or auditing of books of accounts cannot be a ground for questioning the constitutional validity of an Act. If the Parliamentary Act is valid and constitutional, the same cannot be declared ultra vires only because the appellant faces some difficulty in writing off the bad debts.
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2008 (4) TMI 781
Issues:
Violation of Section 9(1)(d) of FERA, 1973
Analysis:
The appellant appealed against an Adjudication Order imposing a penalty for contravention of Section 9(1)(d) of FERA, 1973. The appellant argued that the transaction was covered under the Remittance of Foreign Exchange and Investment in Foreign Exchange Bond (Immunities and Exemptions) Act, 1991, granting immunity. The appellant retracted a confessional statement, alleging coercion, and argued lack of independent evidence to support it. The Enforcement Officers found that the appellant received a cheque from a non-resident Indian and paid an amount exceeding the principal, corroborated by circumstantial evidence.
The appellant contended that the retracted statement should not be admissible without proof of coercion. The Tribunal cited legal precedents stating that retracted confessions can be grounds for conviction with sufficient corroboration. The appellant's admission of receiving the cheque for a premium and lack of evidence of acquaintance with the non-resident Indian supported the charges. The Tribunal discussed the legal principles regarding gifts, emphasizing the need for voluntary gifting without consideration.
The Tribunal referred to Supreme Court cases highlighting the importance of circumstantial evidence in proving guilt beyond reasonable doubt. The appellant's failure to explain the transaction details led to adverse presumptions under the Evidence Act. The burden of proof was on the appellant regarding the transaction's nature, as per legal precedents. Section 9(1)(d) of FERA prohibits payments to non-residents without RBI permission, which was found to be violated. The Tribunal reduced the penalty amount due to a single transaction but upheld the appellant's guilt and the penalty imposition.
In conclusion, the Tribunal upheld the penalty imposition for violating Section 9(1)(d) of FERA, citing corroborated evidence and legal principles regarding confessions, gifts, and circumstantial evidence. The appellant's failure to prove innocence or explain the transaction details led to adverse presumptions, resulting in guilt confirmation. The penalty amount was reduced due to a single transaction, but the appellant's liability was established under the relevant legal provisions.
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2008 (4) TMI 771
Issues Involved:
1. Quashing of Criminal Complaint u/s 482 CrPC.
2. Prima facie case against the Petitioner for violation of Section 18(2) and 18(3) FERA.
3. Interpretation of Section 68 FERA.
Summary:
1. Quashing of Criminal Complaint u/s 482 CrPC:
The petition seeks the quashing of a criminal complaint titled Chief Enforcement Officer v. Ratan Exports and Industries and Ors. pending in the Court of the ACMM, Delhi, insofar as it concerns the Petitioner. The complaint was filed by the Enforcement Directorate u/s 56 FERA read with Sections 49(3) and 49(4) FEMA against the Company REIL and six others, with the Petitioner arrayed as Accused No. 4.
2. Prima facie case against the Petitioner for violation of Section 18(2) and 18(3) FERA:
The Petitioner argued that there is no material, documentary or otherwise, connecting him with the Company. He claimed he was not aware of the day-to-day business, was not in charge, and was not responsible for the affairs of the Company. The Petitioner also stated that he had never attended any Board Meeting and was not involved in the Company's business operations. The complaint was filed mechanically and in haste to meet the deadline for filing under the erstwhile FERA.
3. Interpretation of Section 68 FERA:
Section 68 FERA, similar to Section 141 of the NI Act, requires that the person sought to be arraigned as an accused must be in charge of and responsible for the conduct of the business of the company at the time of the commission of the offence. The complaint must contain specific averments to this effect. The Court referred to the Supreme Court's judgment in Neeta Bhalla I, which mandates that the complaint must state that the accused was in charge of and responsible for the conduct of the company's business at the time of the offence. The Court found that the complaint did not satisfy this requirement as far as the Petitioner was concerned.
Conclusion:
The petition is allowed, and the Petitioner is discharged from the complaint case. The complaint will continue against the other accused, excluding Rajan Bagaria, who has already been discharged. The Court emphasized the need for specific averments in the complaint to make out a prima facie case against a Director under Section 68 FERA. The petition is allowed with no orders as to costs, and the pending application is disposed of. A copy of the order will be sent to the court of the learned ACMM immediately.
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2008 (3) TMI 755
Issues involved:
The judgment involves the contravention of Sections 14 & 8(1) of the Foreign Exchange Regulations Act 1973, penalties imposed by the Dy. Director, Directorate of Enforcement, Mumbai, reduction of penalty amount by the Appellate Tribunal, and challenges to a common appellate judgment and order by the appellants in four appeals.
Details of the judgment:
Contravention of FERA Sections 14 & 8(1):
The appellants were found to have contravened Sections 14 & 8(1) of FERA, leading to penalties imposed by the Dy. Director, Directorate of Enforcement, Mumbai. The Appellate Tribunal partly allowed the appeals, upholding the charges and findings but reducing the penalty amount by 50%.
Facts leading to adjudication:
- M/s. Telstar Travels Pvt. Ltd. operated a ticketing business for crew members working in ships, evolving a method to purchase air tickets abroad.
- Mr. Rajesh Desai, son of the Managing Director, entered into an agreement with a foreign travel agent, involving an account in Geneva operated by Mr. Shirish Shah.
- The foreign account was allegedly operated illegally by M/s. Telstar Pvt. Ltd., with Rajesh Desai instructing on transactions.
- Statements of involved parties and corroborative evidence supported the allegations of illegal operations.
Concurrent findings and evidence:
- Statements of involved parties, documents seized, and corroborative evidence supported the allegations of illegal operations.
- The Appellate Tribunal relied on various statements, documents, and an enquiry report to confirm the illegal operations.
Judgment:
After reviewing the evidence and findings, the Court found no legal issues to interfere with the substantial penalty deduction by the Appellate Tribunal. The judgment summarily dismissed the appeals, upholding the penalties imposed for contravention of FERA sections.
This summary provides a detailed overview of the issues, facts, findings, and the final judgment in the case without revealing specific party names.
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2008 (2) TMI 973
Issues Involved:
1. Contravention of Section 18(2) read with Section 18(3) of the Foreign Exchange Regulation Act, 1973.
2. Contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act, 1973.
3. Contravention of Section 16(1)(a) of the Foreign Exchange Regulation Act, 1973.
Detailed Analysis:
Issue 1: Contravention of Section 18(2) read with Section 18(3) of the Foreign Exchange Regulation Act, 1973
The appellants were penalized for failing to take reasonable steps for the repatriation of export proceeds amounting to UK Pound 422071.10. The Tribunal noted that the appellants had made exports through 18 GRIs from November 1995 to March 1996, with the last payment received in September 1996. The appellants filed a recovery suit in London for UK Pound 287519.76, which was less than the total export proceeds. No satisfactory explanation was provided for this discrepancy. The Tribunal found that the appellants agreed to a settlement of UK Pound 60,000, received only UK Pound 15,000, and failed to take further effective steps to recover the remaining amount. The Tribunal emphasized that mere filing of a recovery suit without vigorous efforts does not constitute taking reasonable steps. The appellants failed to displace the legal presumption under Section 18(3) that they had not taken reasonable steps for repatriation.
Issue 2: Contravention of Section 9(1)(c) of the Foreign Exchange Regulation Act, 1973
The appellants were penalized for acknowledging a debt of UK Pound 22000 in favor of a non-resident person without RBI's permission. The Tribunal noted that the appellants admitted the claim of reduction of price due to late shipment or quality issues, which amounted to an acknowledgment of debt. The Tribunal referred to the provisions of Section 9(1)(c), which prohibit acknowledging any debt in favor of a non-resident without RBI's permission. The Tribunal found that the appellants had acknowledged and settled the debt without obtaining the necessary permission from RBI, thereby violating the provisions of Section 9(1)(c).
Issue 3: Contravention of Section 16(1)(a) of the Foreign Exchange Regulation Act, 1973
The appellants were penalized for not receiving US dollars 7500 paid to M/s Wellbred Asset Management (Bahamas) Ltd. for the placement of preferential shares, which never occurred. The Tribunal noted that the appellants sent letters requesting a refund but failed to take further steps to recover the amount. The Tribunal referred to Section 16(1)(a), which obligates individuals to refrain from any act or omission that delays or prevents the receipt of foreign exchange. The Tribunal found that the appellants' failure to take further action to recover the amount constituted an omission in violation of Section 16(1)(a).
Conclusion:
The Tribunal dismissed the appeals, sustaining the impugned order and maintaining the penalties imposed. The appellants were directed to deposit the remaining penalty amounts within seven days from the receipt of the order, failing which the respondent may recover the same in accordance with the law. The Tribunal found no merit in the appellants' arguments and concluded that the penalties were neither excessive nor harsh considering the high amounts involved in the contraventions.
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2008 (2) TMI 918
Issues Involved:
1. Quashing of Criminal Complaint u/s 482 CrPC.
2. Allegation of contravention u/s 56 FERA.
3. Responsibility and liability of the Petitioner as a Director/Guarantor.
4. Adequacy of evidence and averments in the complaint.
Summary:
1. Quashing of Criminal Complaint u/s 482 CrPC:
This petition seeks the quashing of a criminal complaint titled Chief Enforcement Officer v. Ratan Exports & Industries and Ors. pending in the court of the learned Additional Chief Metropolitan Magistrate (ACMM), New Delhi, insofar as it concerns the Petitioner.
2. Allegation of contravention u/s 56 FERA:
The complaint was filed by the Enforcement Directorate u/s 56 of the Foreign Exchange Regulation Act, 1973 (FERA) read with Sections 49(3) and 49(4) of the Foreign Exchange Management Act, 1999 against the company M/s. Ratan Exports & Industries Limited (REIL) and six other persons, including the Petitioner.
3. Responsibility and liability of the Petitioner as a Director/Guarantor:
The complaint alleged that the Petitioner was a Director/Guarantor of REIL during the relevant period and responsible for the conduct of its day-to-day business. However, the Petitioner contended that he resigned as Director on 26th August 1990, and thus, was not liable for any alleged transactions during 1992-96. The Petitioner provided a copy of Form No. 32 filed with the Registrar of Companies to support his claim.
4. Adequacy of evidence and averments in the complaint:
The Enforcement Directorate based its case on a letter from the United Bank of India dated 12th April 2001, which listed the Petitioner as a "Director/Guarantor." The court noted that the complaint must contain specific averments that the individual directors were in charge of the day-to-day affairs of the company. The court found that the Enforcement Directorate did not have sufficient material to conclude that the Petitioner was responsible for the conduct of the business at the time of the alleged offence. The court emphasized that the Enforcement Directorate ignored the Petitioner's reply to the opportunity notice, which denied his liability.
Conclusion:
The court concluded that the complaint did not even prima facie make out a case against the Petitioner for violation of the provisions of FERA. Consequently, the Complaint Case titled Chief Enforcement Officer v. Ratan Exports & Industries and Ors. pending in the court of the learned ACMM, New Delhi, insofar as the Petitioner is concerned, and all proceedings consequent thereto, are hereby quashed. The petition is allowed with no orders as to costs.
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2008 (2) TMI 811
Stay/Dispensation of pre-deposit - non-compliance with the orders dated 31-5-2005 directing the petitioner to deposit 25% of the penalty within six weeks from the date of the order - Held that:- Both the Tribunal and the learned Single Judge considered not only the aspect of whether or not a prima facie case is made out, but have also considered the financial hardship aspect. The learned Single Judge, on the plea of the appellant, scaled down the penalty amount from 50% to 25% after considering all the facts and circumstances, but the appellant failed to make payment of the pre-deposit amount despite modification of the order and also regardless of several adjournments granted to him for the aforesaid purpose.
Having considered the findings recorded by the Special Director, Enforcement, the Tribunal and the learned Single Judge, we do not think this to be an appropriate case where the appellant is entitled to any relief. The appeal has no merit and is accordingly dismissed.
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2008 (2) TMI 809
Issues Involved:
1. Quashing of proceedings before the Enforcement Directorate.
2. Validity of the show cause notice issued under FERA.
3. Delay in the initiation of proceedings.
4. Allegation of abetment through negligence.
5. Jurisdiction of the High Court under Article 226.
Detailed Analysis:
1. Quashing of Proceedings Before the Enforcement Directorate:
In this batch of writ petitions, directions were sought from the Court to quash the proceedings before the Enforcement Directorate concerning a memorandum of show cause dated 24th February 1995. The petitioners, who were employees of Standard Chartered Bank, were accused of contravening Section 8(1) of the Foreign Exchange Regulation Act, 1973 (FERA) and were liable to be prosecuted under Section 50 of the FERA.
2. Validity of the Show Cause Notice Issued Under FERA:
The show cause notice alleged that the petitioners abetted the offence through negligence by not ensuring the legality of the foreign exchange being deposited. The petitioners contended that the notice was based on a clarificatory circular issued by the RBI in 1995, which did not exist at the time of the alleged irregularities in 1992. The Court found that the notice lacked specific allegations and was issued without proper guidelines in place at the time of the offence, making it ex post facto imposition of liability.
3. Delay in the Initiation of Proceedings:
The petitioners argued that the initiation of proceedings after an unexplained lapse of ten years was arbitrary and indicative of non-application of mind by the respondents. The Court agreed, stating that the revival of proceedings without disclosing reasons for the delay was unlawful and arbitrary. The duty to give reasons is a sine qua non of any executive action, and the absence of such reasons rendered the action liable to be struck down.
4. Allegation of Abetment Through Negligence:
The petitioners contended that the concept of abetment through negligence is alien to law. The Court supported this view, stating that abetment requires intention, knowledge, or wilful omission, none of which are implied by negligence. The Court referred to various Supreme Court decisions, including Ramesh Kumar v. State of Chhatisgarh and State of Haryana v. Jaswinder Singh, to emphasize that negligence does not constitute abetment under the legal definition.
5. Jurisdiction of the High Court Under Article 226:
The respondents argued that the petition was not maintainable due to the existence of alternative remedies under Section 52 of the FERA. However, the Court held that the power under Article 226 is wide and should be exercised to reach injustice wherever found. The Court cited the Supreme Court's decision in Dwarkanath v. ITO and other cases to assert that the availability of alternative remedies does not mechanically reject the power of judicial review under Article 226.
Conclusion:
The Court quashed the impugned notices and all proceedings pursuant to them, stating that the revival of proceedings after a ten-year delay without explanation was unlawful and arbitrary. The Court also held that negligence does not constitute abetment under the law, and the show cause notice lacked specific allegations and was based on guidelines not in place at the time of the alleged offence. The writ petitions were allowed, and no costs were awarded.
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2008 (1) TMI 1010
Issues:
Appeal against adjudication order imposing penalty for contravention of FER Act, reliance on statements and documents, joint proceedings, validity of confession, compliance with procedural laws, admissibility of statements, imposition of penalty.
Analysis:
The appeal was filed against an adjudication order imposing a penalty for contravention of FER Act based on receiving and making payments to individuals in India on instructions from a person in Abu Dhabi. The appellant complied with a pre-deposit order. The Show Cause Notice relied on various statements and documents. The appellant argued against the reliance on statements and documents from other parties, claiming lack of joint proceedings and challenging the credibility of the evidence. The appellant also disputed receiving a substantial amount of money from individuals involved in gold smuggling. The appellant cited judgments from the FERA Board to support their arguments.
The judgment discussed the legal framework regarding confessions under the Indian Evidence Act and Criminal Procedure Code. It differentiated between judicial and extra-judicial confessions, emphasizing the requirements for admissibility. Sections 24 to 30 of the Indian Evidence Act were analyzed in detail, highlighting the conditions for admissibility of confessions. Provisions such as section 25 and 26 were explained, barring confessions made to police officers from being proved against the accused. The rationale behind these provisions, as stated in previous judgments, was also elaborated upon.
The judgment further delved into the distinction between confessions and statements, particularly in the context of recording statements under section 164 of the Criminal Procedure Code. It discussed the mandatory conditions for recording confessional statements and the consequences of non-compliance. A case law from the Andhra Pradesh High Court was referenced to emphasize the importance of following procedural requirements for recording statements under relevant laws.
Ultimately, the Tribunal found no error in the adjudication order and dismissed the appeal for lacking merits. It upheld the penalty imposed on the appellant, considering the factual circumstances and the quantum of contravention. The judgment affirmed the correctness of the impugned order and directed the appellant to deposit the remaining penalty amount within a specified timeframe, failing which the Enforcement Directorate could recover the sum in accordance with the law.
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2008 (1) TMI 1009
The appeal was filed against an adjudication order imposing a penalty on the appellant for failure to provide proof of imports in contravention of FER Act, 1973. The appeal was initially dismissed for being filed late but was reinstated by the High Court. The Tribunal remanded the matter for fresh adjudication, allowing the appellant another opportunity to explain their case. The impugned order was quashed and set aside, with a deadline of 6 months for a new adjudication order.
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2008 (1) TMI 1008
Issues:
- Appeal against adjudication order imposing a penalty for contravention of FER Act by failing to repatriate export proceeds within the prescribed period.
- Interpretation of sections 18(2) and 18(3) of FER Act regarding the obligation of exporters to repatriate export proceeds.
- Displacement of adverse legal presumption under section 18(3) by taking reasonable steps for repatriation.
- Evaluation of the reasonableness of steps taken by the appellant in repatriating export proceeds.
- Impact of bankruptcy of the foreign buyer on the obligation to repatriate export proceeds.
- Assessment of the appellant's failure to take reasonable steps within the statutory period and the relevance of bankruptcy proceedings.
Analysis:
The appeal was filed against an adjudication order imposing a penalty for the appellant's failure to repatriate export proceeds within the prescribed period under the FER Act. The appellant exported goods in 1990 but faced challenges in receiving payment due to the foreign buyer's bankruptcy. The appellant argued that it should not be held guilty for the delay in repatriation due to the buyer's bankruptcy. However, the respondent contended that the statutory provisions of sections 18(2) and 18(3) of the FER Act place an obligation on exporters to repatriate proceeds within a specified period, failing which adverse presumptions arise.
The Tribunal emphasized that the exporter's duty is to make reasonable efforts for repatriation, irrespective of the actual receipt of payment. The legal obligation is to take best endeavors suitable for the circumstances. The statutory provisions create a presumption of non-compliance if payment is not received within the prescribed period. The appellant's argument regarding the pending write-off request to RBI was deemed insufficient to displace the adverse presumption, as no concrete steps were taken to repatriate the proceeds.
The Tribunal analyzed the reasonableness of the steps taken by the appellant, considering the timeline of events leading to the foreign buyer's bankruptcy. Despite the appellant's claims, the Tribunal agreed with the respondent's assertion that reasonable steps were not taken within the statutory period of six months. The delay in addressing the issue until after the buyer's bankruptcy was deemed unacceptable, as exporters are expected to act promptly to repatriate proceeds.
In conclusion, the Tribunal dismissed the appeal, upholding the adjudication order and the imposed penalty. The Tribunal found no merit in the appellant's arguments and emphasized the importance of exporters taking timely and reasonable steps for repatriation of export proceeds. The appellant was directed to deposit the penalty within a specified timeframe, failing which enforcement action would be taken in accordance with the law.
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2008 (1) TMI 1007
The appeal was against a penalty imposed on the appellant for failure to provide proof of imports in utilization of foreign exchange. The Tribunal set aside the adjudication order and remanded the matter back for fresh adjudication within 6 months.
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