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2008 (6) TMI 649
Issues Involved:
1. Validity of the appointment of the adjudication officer after the repeal of the Foreign Exchange Regulation Act, 1973.
2. Legality of the investigation conducted after the repeal of the Foreign Exchange Regulation Act, 1973.
3. Alleged contravention of sections 6(4), 6(5), 7, 8(1), 49, 73(3), and 68 of the Foreign Exchange Regulation Act, 1973.
4. Presumption of correctness of documents under section 72 of the Foreign Exchange Regulation Act, 1973.
5. Compliance with procedural rules during adjudication.
6. Liability of company officials for contraventions.
Issue-wise Detailed Analysis:
1. Validity of the Appointment of the Adjudication Officer:
The appellants argued that the adjudication officer was appointed after the repeal of the Foreign Exchange Regulation Act, 1973 (FERA), thus questioning the validity of the adjudication process. The Tribunal clarified that the appeal arose from an adjudication order passed under section 51 of FERA, which was repealed and replaced by the Foreign Exchange Management Act, 1999 (FEMA). However, section 49 of FEMA allows for the continuation of proceedings under the repealed Act, preserving the rights and liabilities as if the Act had not been repealed. The Tribunal emphasized that the appeal should be decided under the provisions of FERA, and the appointment of the adjudication officer was deemed valid under the saving provisions of FEMA. The Tribunal cited various legal precedents to support this interpretation, including the judgment in Mohd. Mustafa Ahmed Alvi v. Union of India, which upheld the appointment of adjudicating officers under the provisions of FERA.
2. Legality of the Investigation:
The appellants contended that the investigation initiated by the Enforcement Directorate was invalid as it commenced after the repeal of FERA. The Tribunal rejected this argument, stating that section 49(4) of FEMA explicitly provides that offences committed under the repealed Act continue to be governed by its provisions. The Tribunal further noted that even if the investigation was deemed wrongful, the evidence gathered could still be used to establish guilt, referencing case law that supports the admissibility of evidence obtained through illegal searches, such as Puran Mal v. Director of Inspection (Inv.).
3. Alleged Contravention of FERA Provisions:
The appellants were penalized for contravening various sections of FERA, including sections 6(4), 6(5), 7, 8(1), 49, 73(3), and 68. The Tribunal highlighted that as full-fledged money changers (FLM), the appellants were required to act with due care and caution, as stipulated in their RBI license. The Tribunal emphasized that the appellants failed to demonstrate good faith in their transactions, as they sold foreign currency to non-existent firms and individuals, thereby violating the statutory obligations. The Tribunal also clarified that the presence of mens rea (intent) is not necessary for regulatory offences under FERA, as established in State of Maharashtra v. Mayor Hans George.
4. Presumption of Correctness of Documents:
The appellants argued that the presumption of correctness of documents under section 72 of FERA was not applicable due to the absence of a joint trial with the person from whom the documents were recovered. The Tribunal dismissed this argument, stating that the presumption affects the credibility of evidence but does not render it inadmissible. The Tribunal found sufficient evidence to hold the appellants guilty of contravention, irrespective of the presumption under section 72.
5. Compliance with Procedural Rules:
The appellants claimed that the adjudication officer failed to conduct the inquiry as required under rule 3(3) of the Adjudication Proceedings and Appeal Rules, 1973. The Tribunal found no merit in this argument, noting that the adjudication officer provided a full opportunity for the appellants to be heard and that the impugned order was passed following due process.
6. Liability of Company Officials:
The appellants, including the Managing Director, Director, Manager, and Branch Manager, argued that they should not be held liable as they did not physically handle the transactions. The Tribunal rejected this argument, stating that these officials were responsible for supervising the sale of foreign currency and ensuring compliance with statutory obligations. The Tribunal held them liable under section 68 of FERA for failing to prevent the contraventions.
Conclusion:
The Tribunal dismissed the appeal, upholding the penalties imposed on the appellants for contravening the provisions of FERA. The Tribunal found no error in the adjudication process and emphasized the appellants' failure to act with due care and caution in their transactions. The appellants were directed to deposit the penalties within seven days, failing which recovery proceedings could be initiated.
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2008 (6) TMI 648
Issues:
Appeals against penalty imposed for contravention of Foreign Exchange Regulation Act, 1973 - Failure to repatriate export proceeds - Dispensation of pre-deposit - Partnership firm liability - Reasonableness of efforts to receive payment for exports.
Analysis:
The judgment by the Appellate Tribunal for Foreign Exchange involved appeals against a penalty imposed for contravention of the Foreign Exchange Regulation Act, 1973, due to the failure to repatriate export proceeds. The penalty was imposed on the appellant-firm and individual appellants as partners for contravening Section 18(2) r/w Section 18(3) and Section 68 of the Act. The appellants failed to take reasonable steps for repatriation of export proceeds amounting to US dollars 1850931.13 from goods exported through 23 GRIs.
The Tribunal considered the application for dispensation of pre-deposit of penalty and allowed full dispensation for some appellants while requiring partial deposit for others. The appeals were taken up for final disposal on merits after the pre-deposit orders were complied with by the appellants. The parties were represented by their respective counsels, and written submissions were considered.
The appellants contended that a partnership firm was constituted with them as partners, but subsequent changes in partners occurred. It was argued that efforts were made to convince the foreign buyer for remittance of export proceeds. However, the Tribunal noted that the efforts made, such as a visit by a partner to the foreign buyer in 1996, were not sufficient to meet the standard of 'reasonable efforts' required for repatriation of export proceeds.
The Tribunal analyzed the legal provisions under Section 18 of the Foreign Exchange Regulation Act, 1973, which establish the duty of exporters to take reasonable steps to receive payment for exports within the prescribed period. The Tribunal emphasized that the statutory presumption under Section 18(3) is rebuttable but requires a deep consideration of the facts to displace it. The concept of 'reasonable' efforts was discussed, highlighting that mere visits may not suffice for large export values.
In light of the facts and legal principles, the Tribunal allowed the appeals of individual partners but sustained the penalty against the appellant-firm. The judgment referenced previous decisions to support the distinction between partnership firm liability and individual partner liability. The quantum of penalty was deemed appropriate considering the contravention amount. The impugned order was modified, allowing the Enforcement Directorate to appropriate the pre-deposited amount towards penalty and requiring the remaining penalty to be deposited within a week.
In conclusion, the appeals of individual partners were allowed, while the appeal of the appellant-firm was dismissed for lack of merit. The judgment clarified the liability of partners and the firm, emphasizing the need for reasonable efforts in repatriating export proceeds to comply with the legal provisions.
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2008 (6) TMI 647
Issues:
1. Imposition of penalties under sections 9(1)(b) and 9(1)(d) of FER Act, 1973 for receiving payment from NRE account.
2. Violation of principles of natural justice in passing the impugned order.
3. Burden of proof in economic offenses and presumption of facts under the Evidence Act.
4. Denial of inspection and cross-examination rights in adjudication proceedings.
Detailed Analysis:
1. The appeal was against an adjudication order imposing penalties on the appellant and a co-noticee for receiving payment from an NRE account in contravention of sections 9(1)(b) and 9(1)(d) of the FER Act, 1973. The appellant contended that the payment was a gift from a non-resident, supported by a gift deed, and that he did not know the co-noticee. The respondent argued that the appellant failed to provide a plausible explanation for receiving a substantial amount as a gift, leading to a clear contravention of the Act. The appellant's failure to prove the existence of love and affection raised doubts, and the burden of proof was on the appellant to explain the gift under section 106 of the Evidence Act, 1872.
2. The appellant claimed a violation of natural justice as he was not allowed to inspect seized documents or cross-examine the co-noticee. However, the respondent contended that inspection was offered, and no request for cross-examination was made during the proceedings. The burden of proof in economic offenses was discussed, emphasizing that the prosecution is not required to prove facts within the accused's knowledge. The appellant's failure to explain the sudden gift raised suspicions, and the denial of cross-examination was deemed not prejudicial without a valid reason.
3. The judgment highlighted the principles of burden of proof in economic offenses, citing the Collector of Customs v. D. Bhoormull case. It emphasized that the burden is on the accused to explain facts within their special knowledge, and failure to do so may lead to adverse inferences. The judgment also referred to the importance of cross-examination in establishing facts, noting that the right must be justified and not used to prolong proceedings without valid reasons. The appellant's failure to request cross-examination during adjudication was considered an afterthought and not permitted to lengthen the proceedings.
4. Ultimately, the Tribunal upheld the adjudication order, finding no fault in it. The penalty imposed was deemed reasonable and not excessive, warranting no interference. The appeal was dismissed for lacking merit, and the adjudication order was sustained and maintained without any identified errors.
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2008 (6) TMI 646
Issues Involved:
1. Legality, propriety, and correctness of the adjudication order dated 13th October 2000.
2. Timeliness of filing the revision petitions.
3. Authorization of the person filing the revision petitions.
4. Misdescription of the respondent's name.
5. Legal obligations under Sections 18(2), 18(3), and 68 of the Foreign Exchange Regulation Act, 1973.
6. Presumption and rebuttal under Section 18(3) of the Foreign Exchange Regulation Act, 1973.
7. Fresh adjudication requirement.
Detailed Analysis:
1. Legality, Propriety, and Correctness of the Adjudication Order:
The revision petitions challenge the adjudication order dated 13th October 2000, which exonerated the respondents from charges under Sections 18(2), 18(3), and 68 of the Foreign Exchange Regulation Act, 1973. The Tribunal emphasized that the adjudication officer did not consider whether the respondents took reasonable steps to repatriate the export proceeds of US dollars 3,53,77,745, which remains unrealized. The Tribunal found that the adjudication officer's directive to the RBI to consider price reduction was inappropriate as it limited the RBI's discretion.
2. Timeliness of Filing the Revision Petitions:
The petitions were filed 146 days after the adjudication order, which is less than five months. Although Section 52(4) does not prescribe a limitation period, the Tribunal noted that revision petitions should be filed within a reasonable period. Citing the Supreme Court's judgment in E.S.I. Corporation v. C.C. Santhakumar, the Tribunal stated that the reasonable period depends on the factual circumstances of each case. The Tribunal concluded that the delay was not unreasonable and did not demonstrate waiver or acquiescence by the respondents.
3. Authorization of the Person Filing the Revision Petitions:
The petitions were signed by Shri T.K. Gadoo, DLA, but lacked signatures on behalf of the Enforcement Directorate or Director of Enforcement. The Tribunal ruled that this technicality could not block the route of justice, especially since the impugned order was allegedly passed disregarding settled legal positions.
4. Misdescription of the Respondent's Name:
The respondent's name was incorrectly described as "M/s Saket India, Bangalore" instead of "M/s Saketh India Ltd, Bangalore." The Tribunal held that this was a mere misdescription and not a misidentification. Such minor errors should not result in the failure of prosecution, as the respondent was correctly identified.
5. Legal Obligations under Sections 18(2), 18(3), and 68:
Section 18(2) prohibits actions that would prevent payment for exported goods in the prescribed manner without RBI's permission. Section 18(3) presumes that if payment is not received within the prescribed period, the exporter has not taken reasonable steps to recover the payment unless proven otherwise. The adjudication officer failed to consider whether the respondents took reasonable steps to repatriate the export proceeds.
6. Presumption and Rebuttal under Section 18(3):
The Tribunal highlighted that the presumption under Section 18(3) is rebuttable. The adjudication officer did not evaluate whether the respondents' actions could displace this statutory presumption. The Tribunal emphasized the need for a detailed examination of the steps taken by the respondents to recover the export proceeds.
7. Fresh Adjudication Requirement:
The Tribunal quashed the impugned order and remanded the matter for fresh adjudication, starting from the issuance of the Show Cause Notice. The respondents were directed to appear before the adjudication officer on 11th August 2008, with the expectation that the proceedings would conclude within six months.
Conclusion:
The Tribunal found significant procedural and substantive issues in the adjudication order dated 13th October 2000. It emphasized the need for a thorough re-examination of whether the respondents took reasonable steps to repatriate the export proceeds and directed a fresh adjudication to ensure compliance with legal standards.
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2008 (6) TMI 645
Issues:
- Appeal against adjudication order imposing penalty for contravention of FER Act
- Retraction of admissional statement by the appellant
- Burden of proof in adjudication proceedings
- Contravention of Sections 9(1)(b) and 9(3) of FER Act
Analysis:
The Appellate Tribunal for Foreign Exchange heard an appeal against an adjudication order imposing penalties for contravention of the Foreign Exchange Regulation Act (FER Act). The penalties were imposed for contravention of Section 9(3) and Section 9(1)(b) of the FER Act. The appellant was alleged to have paid foreign currency to a non-resident person and received money from a non-resident person in India. The penalty amount was appropriated from the recovered currency, eliminating the need for pre-deposit of penalty. The Tribunal proceeded to dispose of the appeal on merits.
The appellant admitted to receiving Indian currency and making a statement regarding the source of the funds. However, the appellant later retracted the admissional statement, alleging threat and coercion. The Enforcement Directorate issued Show Cause Notices to the appellant, who replied before the adjudication proceedings were held, leading to the impugned order.
Despite the appellant's father claiming ownership of the recovered money, his non-examination did not impact the case significantly. The retraction of the admissional statement after 37 days and the lack of evidence supporting the alleged threat and coercion weakened the appellant's contentions. The Tribunal cited legal precedents emphasizing the voluntary nature of statements made before enforcement authorities.
The Tribunal highlighted the burden of proof in adjudication proceedings, citing legal principles regarding proof in criminal or quasi-criminal cases. The burden lies on the Department to prove contraventions, with the prosecution not required to establish its case with absolute certainty. The Tribunal emphasized the importance of establishing facts beyond a reasonable doubt.
Ultimately, the Tribunal found no merit in the appeal and upheld the impugned order, confirming the penalties imposed for contravention of Sections 9(1)(b) and 9(3) of the FER Act. The appeal was dismissed, and the order was passed accordingly, consigning the appeal to records.
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2008 (6) TMI 644
Issues:
Appeal against Adjudication Order imposing penalty for contravention of FERA and FEMA provisions regarding outstanding export proceeds. Failure to recover export proceeds, lack of reasonable efforts, and imposition of penalty challenged. Non-consideration of appellant's reply to Show Cause Notice, delay in issuing notice, and lack of detailed discussion on efforts made by appellant raised as grounds for appeal. Allegation of inordinate delay in passing orders and violation of principles of natural justice highlighted.
Analysis:
The judgment pertains to an appeal against an Adjudication Order imposing a penalty on an appellant company for contravention of provisions under FERA and FEMA related to outstanding export proceeds. The company failed to recover export proceeds amounting to Rs. 44,41,098, leading to the imposition of a penalty of Rs. 5,00,000. The appellant challenged the order, citing non-recovery reasons and efforts made, which were allegedly not adequately considered by the Adjudicating Officer. The appellant's reply to the Show Cause Notice was claimed to be disregarded, and the delay in issuing notices and passing orders was highlighted as a violation of natural justice principles.
The appellant argued that the Adjudicating Officer failed to consider the detailed film-wise explanations provided by the company regarding efforts made to recover outstanding dues. It was contended that the delay of over 2 years in passing the impugned order invalidated it, as the appellant was not given a fair opportunity to present their case effectively. The appellant's representative emphasized that the order was passed ex-parte without proper notice and that the service of notices was inadequate, undermining the principles of natural justice.
The judgment also referenced the legal principle that inordinate delays in passing orders after hearings can vitiate judgments, citing the Supreme Court's observations in Anil Rai v. State of Bihar. The Court emphasized the importance of timely adjudication to uphold the parties' rights conferred by the Constitution. Consequently, the Adjudicating Authority's order was deemed liable to be quashed, and the matter was remanded for fresh consideration, stressing the need for a detailed reply from the appellant and a fair hearing to ensure public interest and the appellant's rights were protected.
In conclusion, the judgment set aside the impugned order, remanding the matter back to the Adjudicating Officer for reconsideration. The Adjudicating Officer was directed to provide a full opportunity for both parties to present their case and resolve the matter promptly, preferably within six months from the first appearance before him. The judgment aimed to uphold the principles of natural justice and ensure a fair hearing in the adjudication process.
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2008 (6) TMI 643
The Appellate Tribunal quashed the penalty imposed on the appellants for failure to repatriate export proceeds, citing improper service of Show Cause Notice. The matter was remanded for fresh adjudication, with the appellants required to appear before the Adjudication Officer on a specified date. The Adjudication Officer was instructed to conclude the proceedings within six months from the first hearing.
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2008 (6) TMI 642
The Appellate Tribunal for Foreign Exchange, New Delhi dismissed appeal No.D-147/03 and D-180/03 challenging adjudication orders imposing penalties under FER Act. The appeals were filed with insufficient court fees and were dismissed as the proper appellate forum is Special Director (Appeals) FEMA. The appellants sought to withdraw the appeals but did not clearly state so. The appeals were dismissed for lack of provision for transfer to another forum.
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2008 (6) TMI 641
Issues Involved:
1. Legality of the Adjudication Order exonerating respondents from contraventions of Section 9(1)(b), 9(1)(d), and 68 of the Foreign Exchange Regulation Act, 1973.
2. Validity of filing revision petitions after a delay.
3. Authorization of the Deputy Legal Adviser to file the revision petitions.
4. Jurisdiction of the Appellate Tribunal for Foreign Exchange to entertain the revision petitions.
5. Ignorance of law versus ignorance of fact as a defense.
6. Determination of penalties for contraventions of the Foreign Exchange Regulation Act, 1973.
Detailed Analysis:
1. Legality of the Adjudication Order:
The revisionist sought the examination of the legality, propriety, and correctness of the Adjudication Order No. ADJ/72-73/DD/SLH/99 dated 24.9.1999, which exonerated the respondents from allegations of contraventions under Sections 9(1)(b), 9(1)(d), and 68 of the Foreign Exchange Regulation Act, 1973. The Tribunal found that the impugned order erroneously exonerated the respondents based on ignorance of law, which is not a valid defense. The respondents were found guilty of making and receiving payments on behalf of non-residents without the permission of the RBI, thus contravening Sections 9(1)(b) and 9(1)(d).
2. Validity of Filing Revision Petitions After a Delay:
The revision petitions were filed after a delay of 1 year, 10 months, and 12 days. The Tribunal acknowledged that while there is no prescribed limitation period under Section 52(4), the revision petitions must be filed within a reasonable time. The Tribunal referred to judicial norms and previous judgments to determine what constitutes a reasonable period. Despite the delay, the Tribunal decided to examine the merits of the case to avoid perpetuation of injustice.
3. Authorization of the Deputy Legal Adviser:
The Tribunal noted that the Deputy Legal Adviser, Dr. Shamsuddin, who filed the revision petitions, was not authorized to do so. However, it was common practice for revision petitions to be filed under the signatures of either the Deputy Legal Adviser or the Assistant Legal Adviser. The Tribunal decided not to dismiss the petitions on this technicality, especially since it also had suo motto powers to examine the legality, propriety, and correctness of the adjudication order.
4. Jurisdiction of the Appellate Tribunal for Foreign Exchange:
The respondents argued that the Tribunal's revisional jurisdiction is narrower than its appellate jurisdiction and should be exercised within reasonable time limits. The Tribunal clarified that it has revisional jurisdiction under Section 52(4) of the Foreign Exchange Regulation Act, 1973, and Section 19(6) of the Foreign Exchange Management Act, 1999. The Tribunal emphasized that its revisional powers are meant to correct serious illegality and ensure that lower authorities remain within the boundaries of law.
5. Ignorance of Law vs. Ignorance of Fact:
The respondents claimed they were unaware that the individuals on whose behalf they made or received payments were non-residents. The Tribunal rejected this defense, stating that ignorance of law is no excuse. The Tribunal found that the respondents had admitted ignorance of law in their replies to the show cause notices but had not pleaded ignorance of fact. The Tribunal concluded that the respondents' actions contravened the provisions of Section 9(1)(b) and 9(1)(d) of the Foreign Exchange Regulation Act, 1973.
6. Determination of Penalties:
The Tribunal determined that Respondent Nos. 1, 2, and 3 contravened Section 9(1)(d) by making payments on behalf of non-residents, while Respondent Nos. 4 and 5 contravened Section 9(1)(b) by receiving such payments. The Tribunal imposed penalties of Rs. 1,00,00,000 each on Respondent Nos. 1, 2, and 3, Rs. 66,00,000 on Respondent No. 4, and Rs. 34,00,000 on Respondent No. 5. The penalties were deemed appropriate given the gravity of the contraventions and the amounts involved.
Conclusion:
The Appellate Tribunal for Foreign Exchange quashed the impugned adjudication order and imposed substantial penalties on the respondents for contraventions of the Foreign Exchange Regulation Act, 1973. The Tribunal emphasized the importance of adhering to legal provisions and the necessity of imposing penalties to deter future violations.
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2008 (6) TMI 640
Issues:
Appeal against adjudication order imposing a penalty for contravention of sections of FER Act, 1973 based on abetment by assisting in wrongful acquisition of foreign currency, receiving and distributing money, and making payments for property outside India.
Analysis:
The appeal was filed against an adjudication order imposing a penalty on the appellant for contravention of sections of the FER Act, 1973, based on allegations of abetment by assisting in various illegal activities. The appellant's late brother, who was involved in importing old hand cars, had sold these cars in the Indian market. However, it was revealed that the imported cars were not purchased in the name of the dealer but in the name of other individuals without the financial capacity for such imports. The late brother had admitted to violating provisions of the FER Act, but later retracted his statement. The appellant also made an admissional statement, but did not retract it. The Tribunal highlighted that the onus or burden of proof lies on the appellant under section 106 of the Indian Evidence Act. The Tribunal noted the presence of two admissional statements, one retracted by the late brother and the other by the appellant, which was not retracted.
The Tribunal referred to legal precedents regarding retracted statements and their admissibility. It cited the Supreme Court's stance that the voluntary nature of a statement is crucial and that retraction alone does not render a statement involuntary. The Tribunal also mentioned a case where reliance on a retracted confession was allowed if found voluntary and true. It was emphasized that admissional statements of co-noticees can be relied upon for establishing guilt. The Tribunal concluded that the appellant had actively assisted his late brother in contravening the FER Act, and abetment was proven beyond reasonable doubt. No errors in the impugned order were identified, and the appeal was dismissed for lack of merit, with the impugned order sustained and the pre-deposited penalty amount to be appropriated towards the penalty.
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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 637
Issues Involved
1. Condonation of Delay
2. Enhanced Compensation
3. Procedural Hassles and Government Hierarchy
4. Public Accountability
Analysis of the Judgment
1. Condonation of Delay
The State of Maharashtra filed appeals against the judgment and award of the reference court, which were barred by time. The State sought condonation of delay, citing procedural hassles and approvals at different levels in the government departments as reasons for the delay. The court noted that all appeals were barred by more than two years. The applications for condonation of delay did not provide substantial or sufficient cause for the delay, particularly between 15th February 2005 to 22nd June 2005 and from 29th June 2005 to 3rd March 2007. The court emphasized that public authorities are not expected to be negligent and must not let matters become barred by time due to inaction.
2. Enhanced Compensation
The claimants were dissatisfied with the compensation awarded by the Special Land Acquisition Officer (SLAO) and sought enhanced compensation. The reference court awarded compensation at the rate of Rs. 29/- per sq. meter in five references and Rs. 30/- per sq. meter in one reference. The State felt aggrieved by these judgments and filed appeals. The court noted that the claimants had provided evidence of the potential and value of their land, including sale instances and valuations by experts.
3. Procedural Hassles and Government Hierarchy
The State argued that the delay in filing appeals was due to procedural hassles and approvals required at different levels within the government. The court found that the explanations provided were insufficient and lacked details about the steps taken during the prolonged periods of delay. The court highlighted that the State must render reasonable grounds to show sufficient cause for such inordinate delays and that the State is not entitled to claim condonation of delay as a matter of right.
4. Public Accountability
The court discussed the principles governing applications for condonation of delay, emphasizing that the court must exercise its discretion judiciously to ensure no serious prejudice is caused to either party. The court referred to various judgments, stating that the expiration of the period of limitation gives rise to a right in favor of the decree holder, which should not be disturbed lightly. The court also noted that the State's inaction and negligence in filing appeals result in increased liability of statutory interest, burdening the public exchequer. The court directed the State Government to constitute a committee to issue guidelines ensuring timely filing of appeals and to introduce the principle of public accountability for inaction or delays by government officials.
Conclusion
The court declined to condone the delay of more than two years in filing the appeals and dismissed the Civil Applications and Appeals. The court issued directions to the State Government to ensure timely filing of appeals, introduce public accountability, and fix responsibility for inordinate delays. The parties were directed to bear their own costs.
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2008 (6) TMI 636
Application for contempt and an Application for review - willful and deliberate violation and disobedience of the order - mutation of the name of the writ petitioner in relation to the premises - Power of review - HELD THAT:- It is settled law that the expressions "any other sufficient reason" "mean a reason sufficient on grounds at least analogous to those specified immediately previously, that is to say, to excusable failure to bring to the notice of the Court new or important matters or error apparent on the face of the record." Upon an application for review the Court cannot proceed to deal with the case on the merits as if on an appeal.
The Supreme Court of India in Aribam Tuleshwar Sharma v. Aribam Pishak Sharma and Ors. [1979 (1) TMI 228 - SUPREME COURT] holds that there is nothing in Article 226 of the Constitution to preclude a High Court from exercising the power of review, which inheres in every Court of plenary jurisdiction, to prevent miscarriage of justice or to correct grave and palpable errors committed by it. But, there are definitive limits to the exercise of the power of review.
Power of review may be exercised on the discovery of new and important matter or evidence which, after the exercise of due diligence was not within the knowledge of the person seeking the review or could not be produced by him at the time when the order was made; it may be exercised where some mistake or error apparent on the face of the record is found; it may, also, be exercised on any analogous ground. But, it may not be exercised on the ground that the decision was erroneous on merits. That would be the province of a Court of appeal - I am not satisfied that the judgment under review is erroneous on the face of it. This application for review is filed to re-argue the very same points rightly rejected by this Court - Therefore, this application for review stands rejected.
Application for contempt - HELD THAT:- Non-compliance of the order by the contemnors is admitted. By order dated December 3, 1998 this Court, inter alia, directed the respondents in the writ petition to mutate the name of the first petitioner, that is W. H. Targett (India) Limited, in the register instead and in place of Marble Trading Company Limited - An application for contempt is filed alleging willful and deliberate violation and disobedience of the said order. After filing of the application for contempt, an application for review is filed. In the application for review it is alleged that the charge of name to W H. Targett (India) Limited and the application for mutation to record the name of W. H. Targett (India) Limited are fraught with uncertainty, which was not brought to the attention of this Court.
As already, found that in the application for review virtually the points taken in the affidavit-in-opposition are reiterated. It is not open to the contemnors to give a wrong interpretation of the order. In any view of the matter, the view so taken by the contemnors are not found to be legally sustainable. I hold that the stand taken by the contemnors is not bona fide. The contemnors are bound to comply with the order of this Court.
Therefore, this is a fit case for taking action in contempt. However, as the application for review was filed, in order to giving contemnors an opportunity to purge the contempt before I pass the sentence, I adjourn the matter for 4 (four) weeks to enable the contemnors to report compliance, failing which this Court will proceed to pass appropriate orders in respect of the contempt. If not, the contemnors will run the risk of being sentenced.
The office is directed to put up this matter on July 2, 2008 under the heading for orders.
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2008 (6) TMI 635
Issues involved: Leave to appeal against acquittal u/s 138 of the Negotiable Instruments Act.
Summary:
The applicant, a dairy supplier, filed for leave to appeal against the acquittal of the accused under Section 138 of the Negotiable Instruments Act. The complainant claimed that the accused owed them Rs. 2,89,096 for milk supplied. The defense argued that the complainant misused blank cheques provided as security. Evidence showed only Rs. 63,292 was due, not the amount on the cheque. The court found the defense plausible and upheld the acquittal, deeming it reasonable and possible based on the evidence presented. The application for leave to appeal was rejected.
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2008 (6) TMI 634
Issues involved:
The petitioners challenged the order passed by the Appropriate Authority u/s 269UD of the Income Tax Act, 1961, seeking a writ for issuance of a no objection certificate u/s 269UL(2) and restoration of a flat in Mumbai.
Summary:
Issue 1: Disputed Title and Transaction Date
The petitioners entered into agreements regarding the sale of a property with various parties, facing disputes and uncertainties. The transaction date was contested, with substantial payments made in 1988.
Issue 2: Appropriate Authority's Order
The Appropriate Authority passed an order directing the purchase of the property, which was challenged by the petitioners. The court set aside the initial order due to lack of hearing, citing legal precedents.
Issue 3: Fair Market Value Determination
The petitioners objected to the lack of determination of fair market value and discrepancies in the comparison of sale instances. The Appropriate Authority's order was deemed baseless and contrary to legal standards.
Issue 4: Non-Application of Mind and Breach of Natural Justice
The Appropriate Authority failed to consider crucial factors, relied on a previously set-aside order, and did not provide necessary documents. This lack of due process constituted a breach of natural justice.
Conclusion:
The court quashed the impugned order, ruling in favor of the petitioners due to the absence of fair market value determination, discrepancies in sale instance comparisons, and violations of natural justice principles. The petition was allowed with costs.
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2008 (6) TMI 633
Revision u/s 263 - Seven notices issued by the CIT - seeking to revise the earlier assessment orders for a period of seven years - respondent No. 1 proceeded further and passed a revised assessment order with regard to all the aforesaid seven assessment years by seven different orders of the same revising the aforesaid assessment.
HELD THAT:- From the records, It is clear that the petitioner had approached under the Amnesty Scheme and after discussion with the Commissioner of Income Tax, it was agreed that rate of taxable income should be 8 per cent instead of 4 per cent and accordingly he was directed to file revised return at 8 per cent. Even thereafter, the second CIT, on scrutiny and verification found that the earlier decision of the CIT at 8 per cent to be fair and justifiable and accordingly, had issued directions to the LAC, BSD(S) Range, Bombay.
It is very pertinent to note that the revised assessment orders passed by the concerned ITO were solely based on the directives of the CIT, in fact the assessment orders do not indicate any other reason other than the directions mentioned by the CIT also could not dispute that the Department was bound by the Circulars.
We find that the ITO had passed revised assessment order based on the revised return at 8 per cent. The said order is solely based on the directives given by the earlier CIT and the same could not be revised by the subsequent CIT exercising the power u/s 263.
Over and above, we do not find any error or anything unsustainable in law. On the contrary, it appears that the second CIT consistently took a view that 8 per cent would be a fair percentage and a third CIT could not consider the same as 'erroneous' or 'unsustainable in law'. In fact both the notices which were issued u/s 263 as well as revised assessment orders passed by the CIT are totally unsustainable in law for the aforesaid reasons.
Hence, all the seven notices issued u/s 263 as well as seven assessment orders passed by the CIT stand quashed and set aside. Accordingly, rule is made absolute with no order as to costs.
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2008 (6) TMI 632
Issues Involved:
1. Whether the complaint is maintainable under Section 138 of the Negotiable Instruments Act when the cheque was given as security.
2. Whether the subsequent payments made by the accused affect the liability under Section 138.
3. Whether the complaint was filed by the proper party.
4. Whether the cheque was presented within the statutory period.
Detailed Analysis:
Issue 1: Maintainability of Complaint under Section 138 for Cheque Given as Security
The trial court acquitted the accused on the grounds that the cheque was issued as security, not for the discharge of any liability. The appellate court, however, found this view unreasonable. The complainant's letter dated 16-3-1999, which the accused did not respond to, indicated an outstanding liability of Rs. 9,69,647.05. The accused's silence implied consent to the terms, allowing the complainant to complete and present the cheque. The appellate court emphasized that security cheques can be enforced if the underlying liability is established. The court cited the Supreme Court's decision in I.C.D.S. Ltd. v. Beemna Shabeer, which clarified that cheques given as security can attract liability under Section 138 if they are dishonored due to insufficient funds.
Issue 2: Impact of Subsequent Payments on Liability
The trial court noted that the accused made payments post-dishonor of the cheque. The appellate court acknowledged these payments but held that they do not absolve the accused of liability under Section 138, as the offence is complete upon failure to comply with the demand notice. Subsequent payments can only mitigate the sentence, not negate the offence. The court referred to William Rosario Fernandes v. Cabral & Co., which supports this view.
Issue 3: Proper Party to File Complaint
The accused argued that the cheque was issued to a proprietorship concern, not the complainant company. The appellate court dismissed this contention, noting that the accused continued business with the company formed by the original proprietors and made payments to the company. This indicated a continuation of business relations, justifying the company's right to file the complaint.
Issue 4: Presentation of Cheque Within Statutory Period
The accused contended that the cheque was not presented within six months from the date it was issued. The appellate court rejected this argument, stating that the cheque was completed and presented within six months from the date it was filled by the complainant. The court referred to Purushottam Maniklal Gandhi v. Manohar K. Deshmukh, which supports the view that the date on the cheque, filled by the holder, is the relevant date for calculating the statutory period.
Conclusion:
The appellate court set aside the trial court's acquittal and convicted the accused under Section 138 of the Negotiable Instruments Act. The court directed the accused to pay a compensation of Rs. 1,00,000/- to the complainant within sixty days, failing which the accused would undergo six months of simple imprisonment. The court emphasized that securities are meant to be enforced and the complainant followed the correct procedure in enforcing the security given towards the accused's liability.
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2008 (6) TMI 631
Issues Involved:
1. Illegal allotment of shares.
2. Removal of directors.
3. Manipulation of accounts and siphoning off of funds.
4. Illegal appointment of additional directors.
5. Non-maintenance of statutory records and non-holding of AGMs.
6. Shifting of registered office.
7. Involvement of a non-director in the company's affairs.
8. Maintainability of the petition and preliminary objections.
Issue-wise Detailed Analysis:
1. Illegal Allotment of Shares:
- The petitioner alleged the illegal allotment and transfer of shares by R-2 without proper authorization or payment. The return filed with the ROC was fabricated as it did not bear the petitioner's signature, and no board meeting was convened for such allotment. The court found the allotment of 1,00,000 shares and the transfer of 20,132 shares to be illegal and a serious act of oppression, as there was no payment of consideration, and the documents were fabricated.
2. Removal of Directors:
- The petitioner claimed that his resignation was fabricated using blank signed papers given for business purposes. The court noted that the resignation letter contained inaccuracies and was not supported by valid board meeting minutes. The removal of the petitioner and R-3 as directors was deemed illegal and set aside.
3. Manipulation of Accounts and Siphoning Off of Funds:
- The petitioner alleged that the accounts were manipulated, and funds were misappropriated by R-2 and R-11. The respondents failed to produce up-to-date statements of accounts or refute the allegations of misappropriation. The court directed the appointment of an independent auditor to investigate the accounts and restore any siphoned amounts.
4. Illegal Appointment of Additional Directors:
- The petitioner contended that the appointment of R-4 to R-10 as additional directors was illegal as no board meeting was held, and the appointments violated the Articles of Association. The court found the appointments to be illegal and set them aside.
5. Non-maintenance of Statutory Records and Non-holding of AGMs:
- The petitioner highlighted that the company had not prepared or audited its accounts since 2003-04, nor held AGMs, exposing the company to penalties. The court noted that the respondents failed to maintain statutory records and finalize accounts, attributing the non-preparation to the petitioner without substantiation.
6. Shifting of Registered Office:
- The petitioner alleged that the registered office was shifted to R-2's residence without proper authorization. The court found the shifting to be illegal as there was no valid board resolution, and the alleged minutes did not bear the petitioner's signature. The shifting was canceled.
7. Involvement of a Non-director in the Company's Affairs:
- The petitioner alleged that R-11, a state government employee and husband of R-2, was involved in the company's day-to-day affairs, acting as a de facto director. The court found that R-11 was indeed involved and held him liable for acts of oppression and mismanagement.
8. Maintainability of the Petition and Preliminary Objections:
- The respondents argued that the petition did not satisfy the conditions under Sections 397 and 398 of the Companies Act, as the company was a glorified partnership with no public interest involved. The court rejected this objection, stating that acts of oppression against members also attract the provisions of these sections. The court found the petition maintainable and dismissed the preliminary objections.
Conclusion:
- The court granted the prayers contained in the petition, setting aside the illegal appointments and share allotments, reinstating the petitioner and R-3 as directors, and ordering an independent audit of the company's accounts. The shifting of the registered office was canceled, and the petitioner was given the option to exit the company on receipt of fair valuation of his shares and dues. The petition was disposed of in these terms, with all interim orders vacated and no order as to costs.
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2008 (6) TMI 630
Issues Involved:
1. Validity of the refusal by the Securities and Exchange Board of India (SEBI) to allow withdrawal of the public offer under Regulation 27(1)(d) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
2. Interpretation of Regulation 27(1)(d) of the takeover code.
3. Alleged violation of the principles of natural justice due to lack of personal hearing.
Issue-wise Detailed Analysis:
1. Validity of the refusal by SEBI to allow withdrawal of the public offer:
The appellants challenged SEBI's refusal to allow withdrawal of the open offer made by them. The appellants had invoked the pledge on shares of the target company due to non-redemption of premium notes and subsequently made a public announcement to acquire further shares as required by the takeover code. They later sought to withdraw the offer citing special circumstances, including financial instability and embezzlement within the target company, which they claimed were discovered post-announcement. SEBI declined the request, stating that the appellants should have conducted due diligence before acquiring the shares and that the circumstances cited did not merit withdrawal under Regulation 27(1)(d). The Tribunal agreed with SEBI, noting that the appellants were aware of several adverse facts about the target company at the time of the public announcement and had taken a business decision with open eyes.
2. Interpretation of Regulation 27(1)(d) of the takeover code:
Regulation 27(1) of the takeover code states that a public offer, once made, shall not be withdrawn except under specific circumstances, including statutory approval refusal, death of the sole acquirer, or "such circumstances as in the opinion of the Board merit withdrawal." The Tribunal emphasized that these exceptions should be strictly construed. The general words in Clause (d) must be read ejusdem generis with the preceding clauses, meaning they should be limited to circumstances analogous to those making it impossible to complete the public offer. The Tribunal held that the special circumstances cited by the appellants did not make it impossible for them to carry out the public offer and thus did not fall within the scope of Regulation 27(1)(d).
3. Alleged violation of the principles of natural justice due to lack of personal hearing:
The appellants argued that SEBI violated the principles of natural justice by not affording them a personal hearing before rejecting their request to withdraw the public offer. The Tribunal rejected this contention, stating that the appellants had ample opportunity to present their case through written communications. The Tribunal cited the legal principle that personal hearings are not mandatory in every case where a quasi-judicial authority has to decide on an application. The Tribunal concluded that there was no violation of natural justice as the appellants had already presented their arguments in writing and SEBI had considered these before making its decision.
Conclusion:
The appeal was dismissed, with the Tribunal upholding SEBI's decision to refuse the withdrawal of the public offer. The Tribunal found no merit in the appellants' arguments regarding the interpretation of Regulation 27(1)(d) and the alleged violation of natural justice. The parties were directed to bear their own costs.
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