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• 2008 (7) TMI 1129
  
  ISSUES PRESENTED and CONSIDERED

  The core legal issues considered in this judgment are:

  1. Whether the order of acquittal passed by the trial court is incorrect, illegal, perverse, and capricious.

  2. Whether the discrepancy in the amount stated in figures and words on the cheque invalidates the cheque under Section 18 of the Negotiable Instruments Act (N.I. Act).

  3. Whether the notice issued by the appellant was in conformity with Section 138(b) of the N.I. Act, given the discrepancy in the amount demanded.

  4. Whether the presumption under Sections 118 and 139 of the N.I. Act was correctly applied by the trial court, and whether the respondent successfully rebutted this presumption.

  ISSUE-WISE DETAILED ANALYSIS

  1. Validity of the Trial Court's Acquittal Order

  The primary issue was whether the trial court's acquittal was based on a correct interpretation of the law and facts. The High Court analyzed whether the trial court erred in its judgment by focusing on technicalities rather than the substantive intent of the N.I. Act.

  2. Discrepancy in Figures and Words on the Cheque

  The legal framework under Section 18 of the N.I. Act states that if the amount is stated differently in figures and words, the amount in words prevails. The Court noted that the discrepancy between Rs. 75,000 (figures) and 'Rupees Seventy Thousand Only' (words) on the cheque does not invalidate it. The Court cited the precedent in Devi Tyres v. Nawab Jan, which held that such discrepancies are not fatal to the prosecution.

  3. Compliance with Section 138(b) of the N.I. Act

  The trial court had acquitted the respondent on the grounds that the notice sent by the appellant was not in compliance with Section 138(b) of the N.I. Act due to the incorrect amount mentioned. However, the High Court referenced the Devi Tyres case, emphasizing that a divergence in the figures is not fatal. The Court concluded that the notice was valid, and the trial court erred in its interpretation.

  4. Presumption under Sections 118 and 139 of the N.I. Act

  Sections 118 and 139 of the N.I. Act create a presumption in favor of the holder of the cheque that it was issued for a legally recoverable debt. The appellant had presented evidence, and the respondent failed to rebut this presumption as he did not present any evidence or testimony. The trial court had incorrectly focused on the appellant's capacity to lend money, which was irrelevant once the cheque was admitted. The High Court found that the trial court failed to apply the presumption correctly and did not require the respondent to disprove the presumption.

  SIGNIFICANT HOLDINGS

  The High Court held that the trial court's judgment was flawed due to its misinterpretation of the provisions of the N.I. Act. The Court emphasized the following principles:

  "Merely because there is a discrepancy in the cheque and there is a difference in the amount mentioned in words and figures, the cheque cannot be termed as invalid."

  "A divergence in figures mentioned in the notice of demand is not fatal to the prosecution."

  The High Court set aside the trial court's order of acquittal, convicting the respondent under Section 138 of the N.I. Act. The respondent was sentenced to pay a fine of Rs. 80,000, with a default sentence of three months of simple imprisonment. The fine amount, upon deposit, was to be released to the appellant-complainant as compensation.

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• 2008 (7) TMI 1128
  

  1. ISSUES PRESENTED and CONSIDERED

  The legal judgment addresses the following core legal questions:

  • Whether the appellant's failure to comply with the pre-deposit order justifies the dismissal of the appeal under the statutory framework of the Foreign Exchange Regulation Act, 1973 (FERA).
  • Whether the appellant demonstrated sufficient cause or undue hardship to warrant dispensation from the pre-deposit requirement under section 52(2) of FERA.

  2. ISSUE-WISE DETAILED ANALYSIS

  Issue 1: Compliance with Pre-deposit Order

  • Relevant Legal Framework and Precedents: The legal framework is governed by section 52(2) of the FERA, 1973, which mandates that an appellant must deposit the penalty amount when filing an appeal unless dispensation is granted due to undue hardship.
  • Court's Interpretation and Reasoning: The Tribunal emphasized the mandatory nature of the pre-deposit requirement, noting that the appellant failed to comply with the order to deposit the penalty amount within the stipulated timeframe.
  • Key Evidence and Findings: The Tribunal noted the absence of the appellant at the hearing and the lack of any communication or justification for non-compliance with the pre-deposit order.
  • Application of Law to Facts: The Tribunal applied section 52(2) of FERA, concluding that the appellant's non-compliance with the pre-deposit requirement, without seeking dispensation or demonstrating undue hardship, warranted dismissal of the appeal.
  • Treatment of Competing Arguments: The respondent argued for dismissal based on non-compliance, which the Tribunal found compelling given the statutory obligations under FERA.
  • Conclusions: The Tribunal concluded that the appeal should be dismissed due to the appellant's failure to comply with the pre-deposit order, as no sufficient cause or undue hardship was demonstrated.

  Issue 2: Dispensation from Pre-deposit Requirement

  • Relevant Legal Framework and Precedents: The second proviso to section 52(2) of FERA allows for dispensation from the pre-deposit requirement if undue hardship is demonstrated.
  • Court's Interpretation and Reasoning: The Tribunal noted that dispensation could only be granted if the appellant provided evidence of undue hardship, which was not done in this case.
  • Key Evidence and Findings: The appellant did not appear at the hearing or provide any evidence or arguments to justify dispensation from the pre-deposit requirement.
  • Application of Law to Facts: The Tribunal applied the legal standard for dispensation and found no basis for granting it, as the appellant failed to make any case for undue hardship.
  • Treatment of Competing Arguments: The absence of the appellant's arguments left the Tribunal with no basis to consider dispensation, reinforcing the decision to dismiss the appeal.
  • Conclusions: The Tribunal concluded that there was no justification for dispensing with the pre-deposit requirement, leading to the dismissal of the appeal.

  3. SIGNIFICANT HOLDINGS

  • Preserve verbatim quotes of crucial legal reasoning: The Tribunal stated, "The appellants are under an obligation to file appeal simultaneously along with penalty amount unless and until dispensation is granted under second proviso to section 52(2)." This underscores the mandatory nature of the pre-deposit requirement.
  • Core Principles Established: The judgment reinforces the principle that compliance with statutory requirements, such as pre-deposit conditions, is essential unless a clear case of undue hardship is demonstrated.
  • Final Determinations on Each Issue: The appeal was dismissed due to non-compliance with the pre-deposit order, and no dispensation was granted as the appellant failed to demonstrate undue hardship or provide sufficient cause for non-compliance.

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• 2008 (7) TMI 1127
  
  Issues:
  1. Whether the Assessee discharged the onus under Section 68 of the Income Tax Act for the cash credits.
  2. Whether the Tribunal was justified in deleting the addition on account of cash credits without considering the evidence on record.
  
  Analysis:
  
  Issue 1:
  The assessment year 2002-03 saw the Assessee filing a return of income totaling Rs. 3,00,210, with the assessment completed on March 30, 2005, resulting in a total income of Rs. 54,47,370. The addition of Rs. 50,00,000 on account of unexplained cash credit and motor car depreciation was made. The Assessing Officer noted that the company received Rs. 50,00,000 from five parties as share application money without due compliance. However, all five parties eventually submitted confirmations and bank statements. An inquiry was conducted, leading to the addition under Section 68 of the Act. The Commissioner of Income Tax (Appeals) affirmed this addition, prompting the Assessee to appeal to the Income Tax Appellate Tribunal, which subsequently deleted the Rs. 50 lakhs addition.
  
  Issue 2:
  The Revenue, dissatisfied with the Tribunal's decision, filed a tax appeal. The Revenue contended that the Tribunal erred in deleting the addition without proper consideration of the evidence and by not establishing the creditworthiness of the five companies. The Tribunal's decision was challenged citing the case of Rameshchandra M. Luthra v. Asst. CIT (2002) 257 ITR 460. However, the Tribunal, after reviewing all relevant documents submitted by the Assessee during the assessment proceedings, found that the Assessee had fulfilled the onus of proving the identity of parties, genuineness of transactions, and creditworthiness of share applications. The Tribunal disagreed with the Assessing Officer's adverse inference and noted that the Assessing Officer's doubts were unfounded. The Tribunal referenced the decision in CIT v. Pragati Co-operative Bank Ltd. (2005) 278 ITR 170 to support its conclusion. Ultimately, the High Court upheld the Tribunal's decision, stating that all findings were adequately considered, and no substantial question of law arose.
  
  In conclusion, the High Court dismissed the appeal, affirming the Tribunal's decision to delete the addition of Rs. 50 lakhs under Section 68 of the Income Tax Act for the assessment year 2002-03.

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• 2008 (7) TMI 1126
  
  Issues Involved:
  
  1. Whether the convening, holding, and conducting of meetings of shareholders, secured creditors, and unsecured creditors should be dispensed with for approving the scheme of amalgamation.
  2. Whether the objections raised by an unsecured creditor regarding the waiver of meetings and the scheme of amalgamation are valid.
  3. Whether the rights and interests of creditors, both secured and unsecured, are adequately protected under the proposed scheme of amalgamation.
  
  Detailed Analysis:
  
  Issue 1: Waiver of Meetings for Approving the Scheme of Amalgamation
  
  The petitioner, Sargon Geosynthetics Limited, filed a petition under Section 391 of the Companies Act, 1956, seeking to dispense with the convening, holding, and conducting of meetings of shareholders, secured creditors, and unsecured creditors for approving the proposed scheme of amalgamation with Maccaferri Environmental Solutions Private Limited. The petitioner argued that the scheme is a compromise or arrangement between the company and its shareholders, and since the transferee company holds 100% of the equity shares of the transferor company, the consolidation of business would be beneficial. The scheme promises commercial and economic viability, leading to organizational efficiencies and optimal resource utilization. The petitioner further submitted that the entire liability of the transferor company would be taken over by the transferee company, ensuring that the rights and interests of the creditors are not adversely affected.
  
  Issue 2: Objections by Unsecured Creditor
  
  An unsecured creditor, Bharat Spun Pipe and Construction Co., objected to the waiver of meetings, arguing that the scheme of amalgamation would adversely affect the rights of unsecured creditors. The objector contended that a meeting of unsecured creditors is mandatory unless all creditors agree to waive it. The objector also raised concerns about the non-filing of the latest audited statement of accounts, alleging that the petitioner company has engaged in unjustified and unlawful practices. The objector claimed that the scheme should not be sanctioned until the petitioner company settles its debts towards the objector.
  
  Issue 3: Protection of Creditors' Rights
  
  The court examined whether the scheme of amalgamation adequately protects the rights of creditors. The scheme stipulates that all secured and unsecured debts, liabilities, and obligations of the transferor company would be transferred to the transferee company, ensuring that creditors' claims remain intact. The court noted that the scheme provides for the transferee company to discharge any liability accrued against the transferor company. The court emphasized that while meetings of shareholders and creditors are generally required, exceptions can be made where there is no factual or legal impediment to waiving such meetings. The court found that the objector failed to demonstrate that the scheme is mala fide, fraudulent, or adversely affects creditors' rights.
  
  Conclusion:
  
  The court concluded that the scheme of amalgamation protects the rights of creditors, both secured and unsecured, and that the objections raised by the unsecured creditor lacked substantial merit. The court held that the interest of creditors would be suitably protected by the scheme, allowing the objector to press its claims against both the transferor and transferee companies. Consequently, the court exercised its discretion to waive the convening, holding, and conducting of meetings of shareholders and creditors, granting liberty to the petitioner to file a second motion in accordance with the law. The objections were rejected, with the court noting that the objector could raise any further objections during the second motion stage.

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• 2008 (7) TMI 1125
  
  Issues:
  1. Contravention of provisions of FERA, 1973 - Sections 9(1)(b) & 9(1)(a).
  2. Validity of confessional statements and their retraction.
  3. Corroboration of evidence to prove charges.
  4. Prohibition of transactions under FERA, 1973 - Section 9(1)(b) & 9(1)(a).
  
  Analysis:
  1. The appeal was filed against an Adjudication Order imposing a penalty for contravention of FERA provisions. The appellant had received payment on behalf of an NRI and made payments to a person resident outside India without RBI permission. The appellant deposited the penalty amount but did not appear for the appeal, indicating lack of interest. Investigations revealed misuse of NRE accounts, with the appellant facilitating transactions. The appellant admitted arranging a draft and receiving payment for the NRI, leading to contravention of FERA sections. The confessional statements were corroborated by recipient statements and retraction lacked supporting evidence.
  
  2. The Supreme Court's observations emphasized the voluntary nature of statements for validity. The appellant's admission, along with corroborative evidence, created a strong case against him. The retracted confessional statement, without proof of coercion, held weight in establishing guilt. The court may rely on retracted confessions if corroborated adequately. In this case, the admission and corroborative evidence formed a substantial basis for proving the charges.
  
  3. The appellant's actions in delivering a draft and handling payments for the NRI violated FERA provisions. The significant amount involved was deemed a gift, but lack of acquaintance between parties raised suspicions. The appellant's role in the transaction, without proper justification, indicated guilt beyond reasonable doubt. The Adjudicating Officer's decision was upheld as the impugned order stood judicial scrutiny. The appeal was dismissed, affirming the appellant's guilt and appropriating the pre-deposited amount towards the penalty.
  
  4. The judgment highlighted the seriousness of contravening FERA provisions, emphasizing the need for proper documentation and adherence to regulations. The case serves as a reminder of the legal consequences of unauthorized international transactions and the importance of compliance with foreign exchange laws to avoid penalties and legal actions.

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• 2008 (7) TMI 1124
  
  Issues:
  - Violation of provisions of section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973.
  - Adequacy of evidence and corroboration in establishing guilt.
  - Admissibility of co-noticee's statement as evidence.
  - Validity of confessional statement obtained from the appellant.
  - Compliance with principles of natural justice regarding cross-examination.
  - Quantum of penalty imposed.
  
  Analysis:
  
  The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi involved an appeal against an Adjudication Order imposing a penalty for contravention of provisions of the Foreign Exchange Regulation Act, 1973. The appellant, Hardeep Singh, was charged with violating section 8(1) and 8(2) of the Act by acquiring foreign exchange without permission. The appeal raised concerns about lack of opportunity to defend, insufficiency of evidence, and contradictions in statements. The appellant's association with Malkiat Singh Multani, who admitted illegal foreign exchange dealings, was a key point of contention.
  
  The Tribunal examined the evidence, including statements from Enforcement Officers and co-noticee Malkiat Singh. It found that the appellant's admission of selling foreign exchange to Malkiat Singh was corroborated by Malkiat Singh's statement. The Tribunal rejected the appellant's argument of coercion in obtaining his statement, citing the burden of proof on the appellant. It referenced legal precedents to support the admissibility of retracted confessional statements under certain conditions.
  
  Regarding the right to cross-examine the co-noticee, the Tribunal emphasized that natural justice principles were not violated as sufficient justification was lacking. It cited a Supreme Court ruling to support this stance. Ultimately, the Tribunal concluded that the charges against the appellant under section 8(1) and 8(2) were proven, leading to a guilty verdict. However, considering the appellant's circumstances, the Tribunal reduced the penalty amount from Rs. 92,500 to Rs. 60,000 to achieve justice, with instructions for penalty payment within a specified timeframe.
  
  In summary, the judgment addressed issues of evidence sufficiency, admissibility of statements, compliance with natural justice principles, and penalty imposition, ultimately upholding the guilt of the appellant while modifying the penalty amount in consideration of the appellant's situation.

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• 2008 (7) TMI 1123
  
  Issues:
  Violation of provisions of FERA - Sections 9(1)(b) and 9(1)(d)
  Appellant's denial of involvement in illegal payments
  Confirmation of handwriting on seized documents
  Evidence of recipients admitting to receiving payments
  Analysis of the burden of proof in economic offences
  
  Analysis:
  
  The judgment by the Appellate Tribunal for Foreign Exchange in New Delhi involved an appeal against an Adjudication Order imposing a penalty on the appellant for contravention of Sections 9(1)(b) and 9(1)(d) of FERA, 1973. The appellant, Shri. Khaja Qutubuddin Afzal, was found to have received and made payments totaling Rs. 35,72,000 without RBI permission, leading to the confiscation of a portion of the amount. The appellant contested the charges, claiming innocence and denial of knowledge regarding the seized documents. However, the Govt. Examiner confirmed the appellant's handwriting on the documents, supporting the charges against him.
  
  The appellant's defense included statements about being an agriculturist and having a misunderstanding with his uncle who allegedly orchestrated the case against him. Despite the appellant's denial, evidence from seized documents and statements of recipients incriminated him. The Enforcement Officers confirmed the handwriting match and identified the appellant as the deliverer of money. The recovery of substantial amounts without a valid source further strengthened the case against the appellant.
  
  The judgment emphasized the burden of proof in economic offenses, stating that while proof beyond reasonable doubt is necessary, it does not require mathematical precision. Quoting a Supreme Court case, the judgment highlighted the need for establishing a degree of probability for conviction in such cases. The Tribunal found the charges under Sections 9(1)(b) and 9(1)(d) proven against the appellant, dismissing his appeal and upholding the penalty. The appellant was directed to pay the balance amount within a specified time frame, failing which the respondent could recover it according to the law.

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• 2008 (7) TMI 1122
  
  Issues:
  - Appeal against Adjudication Order imposing a penalty
  - Non-compliance with the order for pre-deposit of penalty amount
  - Lack of appearance or representation by the appellant
  - Legal provisions regarding pre-deposit of penalty amount for filing an appeal
  
  Analysis:
  The judgment pertains to an appeal filed against an Adjudication Order imposing a penalty for contravention of provisions of the Foreign Exchange Regulation Act, 1973. The appellant, despite being directed to make a partial payment of the penalty amount within a specified period, failed to comply even after six months. The appellant did not appear or have any representation during the proceedings, indicating a lack of bonafide on their part. The legal provision under Section 52(2) of FERA, 1973, mandates the pre-deposit of the penalty amount for filing an appeal, unless dispensation is granted due to undue hardship. In this case, the appellant neither appeared nor informed the Tribunal about compliance with the order. The appellant's failure to comply, despite leniency shown by the Tribunal, led to the dismissal of the appeal. The judgment emphasizes the importance of following statutory requirements and timely compliance with judicial orders to proceed with an appeal.
  
  The Tribunal highlighted the statutory obligation of appellants to file an appeal along with the penalty amount, unless dispensation is granted due to undue hardship. The appellant's non-compliance with the order for pre-deposit of the penalty amount was considered a condition precedent to proceeding with the appeal. Despite leniency shown by the Tribunal in dispensing with a portion of the penalty amount and providing sufficient time for compliance, the appellant failed to adhere to the judicial order. The lack of representation or communication from the appellant during the proceedings further demonstrated a lack of bonafide on their part. The judgment underscores the significance of adhering to legal requirements and complying with judicial orders to maintain the integrity of the appeal process.
  
  The Tribunal, in accordance with the statutory scheme, dismissed the appeal due to the appellant's failure to comply with the pre-deposit requirement of the penalty amount. The appellant's lack of appearance or representation, coupled with the non-compliance with the judicial order despite leniency shown, led to the dismissal of the appeal. The judgment emphasizes the importance of upholding legal obligations and following procedural requirements to ensure the proper adjudication of appeals. The record of the appeal was directed to be consigned to the Record Room following the dismissal order.

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• 2008 (7) TMI 1121
  
  Issues:
  - Appeal against Adjudication Order imposing penalties for contravention of Foreign Exchange Regulation Act, 1973
  - Compliance with pre-deposit order
  - Waiver granted by RBI for unrecovered export price
  - Interpretation of section 18(2) and section 18(3) of FER Act, 1973
  
  Analysis:
  The judgment by the Appellate Tribunal for Foreign Exchange, New Delhi pertains to three appeals challenging an Adjudication Order imposing penalties for contravention of the Foreign Exchange Regulation Act, 1973. The order imposed a penalty of Rs. 25,00,000 on the appellant-company and Rs. 2,50,000 each on two other appellants for failure to take reasonable steps for repatriation of export proceeds, as per section 18(2) read with section 18(3) of the FER Act, 1973. The Tribunal had earlier allowed the appellant-company to make a pre-deposit of 10% penalty, with full dispensation for the other appellants, and now the appeals were taken up for final disposal on merits.
  
  The crux of the argument presented by the appellant's counsel was that the RBI had granted a waiver of the unrecovered export price in accordance with section 18(2) of the FER Act, 1973. The appellant submitted letters from Oriental Bank of Commerce to support this claim. On the other hand, the respondent's counsel contended that discrepancies in the letters from the bank regarding the description of GR numbers and amounts cast doubt on the waiver claim. The respondent supported the impugned order based on these discrepancies.
  
  The Tribunal analyzed the provisions of section 18(2) and section 18(3) of the FER Act, 1973, which deal with payments for exported goods and restrictions on actions without RBI permission. The Tribunal noted that the legislation grants the RBI the power to waive unrecovered export prices. Upon examining the letters from Oriental Bank of Commerce, the Tribunal found that while there were discrepancies in the description of amounts in some letters, the overall consistency in GR numbers covered in the written-off amounts was maintained. Consequently, the Tribunal concluded that the discrepancies did not impact the essence of the waiver granted by the RBI.
  
  In light of the above analysis, the Tribunal allowed the appeals on their merits and quashed the impugned order imposing penalties. The Tribunal held that the discrepancies in the bank letters did not invalidate the waiver granted by the RBI under section 18(2) of the FER Act, 1973. As a result, the penalties imposed on the appellants were set aside.

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• 2008 (7) TMI 1120
  
  Issues:
  Violation of FER Act, 1973 - Penalties imposed on various appellants for contravention of different sections of the FER Act, 1973.
  
  Analysis:
  1. The Appellate Tribunal for Foreign Exchange, New Delhi, delivered a judgment regarding penalties imposed on multiple appellants for violations of the FER Act, 1973. The penalties were imposed based on contraventions of specific sections of the Act.
  
  2. The penalties included fines on partnership firms and individuals for making payments locally in India on behalf of persons resident outside India, placing sums to the credit of non-resident individuals, and making payments to foreign residents in contravention of the FER Act, 1973.
  
  3. The appeals, dating back to 1992, were granted dispensation from making pre-deposits due to the time elapsed. The appeals were taken up for final disposal on merits, and written submissions were considered.
  
  4. The legal representative of the appellants argued regarding the dissolution of partnerships due to the death of a partner and the lack of evidence regarding the continuation of the partnership firms. The legal heirs did not express interest in substitution.
  
  5. The tribunal invoked adverse presumption under the Evidence Act, 1872, due to the absence of evidence regarding the continuation of the partnership firms after the death of partners. Appeals related to deceased partners were considered liable to be abated.
  
  6. Arguments were presented by the appellants, emphasizing the business transactions conducted in the normal course of business and the power of attorney held by certain individuals to act on behalf of non-resident persons.
  
  7. The respondent's representative contended that the deceased person had been staying mostly outside India, as evidenced by statements and records, establishing him as a person resident outside India.
  
  8. The core issue revolved around determining whether the individuals in question were residents outside India at the relevant time, based on their business activities and residence patterns.
  
  9. The tribunal analyzed the residency status of the individuals and the nature of transactions, concluding that contraventions of FER Act provisions were established in certain cases, leading to the dismissal of several appeals.
  
  10. The judgment highlighted the burden of proof on the appellants to establish the legality of transactions and the residency status of the individuals involved, emphasizing the need for evidence in economic offense cases.
  
  11. The tribunal dismissed multiple appeals for lack of merits and abated appeals related to deceased individuals. The appellants were directed to deposit balance amounts within a specified timeframe for penalty realization by the Enforcement Directorate.

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• 2008 (7) TMI 1119
  
  Issues Involved:
  1. Failure to furnish evidentiary proof of utilization of foreign exchange.
  2. Compliance with Section 8(3) and Section 68 of the Foreign Exchange Regulation (FER) Act, 1973.
  3. Burden of proof and presumption of culpable mental state.
  4. Vicarious liability of individual directors.
  
  Issue-wise Detailed Analysis:
  
  1. Failure to furnish evidentiary proof of utilization of foreign exchange:
  The appellant company was penalized for failing to provide evidence of utilizing the foreign exchange remitted to M/s TRES Corporation, Taiwan, in contravention of Section 8(3) r/w Section 68 of the FER Act, 1973. The appellant contended that the remittance was for technical know-how under an RBI-approved collaboration agreement, and the technology was used to import and export goods. However, the respondent argued that investigations revealed no transfer of technology or training occurred after the remittance.
  
  2. Compliance with Section 8(3) and Section 68 of the FER Act, 1973:
  Section 8(3) mandates that foreign exchange acquired for a specific purpose must not be used otherwise. The Tribunal noted that the appellant company's claim of receiving know-how and training was unsupported by evidence, especially since the agreement stipulated delivery of technical documents only after full payment. The Tribunal emphasized that the burden of proof lies with the appellant to demonstrate the actual utilization of the foreign exchange.
  
  3. Burden of proof and presumption of culpable mental state:
  The Tribunal referred to Section 106 of the Indian Evidence Act, which places the burden of proving facts within the special knowledge of a person on that person. The Tribunal cited precedents, including Trimukh Maroti Kirkan v. State of Maharashtra and Collector of Customs v. D. Bhoormull, to highlight that the prosecution need not prove its case with mathematical precision. The appellant's failure to provide evidence of utilizing the foreign exchange led to an adverse inference against them. Additionally, Section 59 of the FER Act presumes a culpable mental state, and Section 71(2) places the burden of proof on the person prosecuted to show that the foreign exchange was used for the permitted purpose.
  
  4. Vicarious liability of individual directors:
  The Show Cause Notice clearly indicated that the individual appellant was responsible for the company's conduct during the relevant period. The Tribunal noted that no efforts were made to counter the charges against the individual director. Citing Everest Advertising (P.) Ltd. v. State, Govt. of NCT of Delhi and S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla, the Tribunal emphasized that vicarious liability requires proof that the individual was both in charge of and responsible for the company's conduct.
  
  Conclusion:
  The Tribunal dismissed the appeals, finding no merit in the appellants' contentions. The pre-deposited penalty amounts were appropriated, and the appellants were directed to pay the remaining penalties within seven days, failing which the Enforcement Directorate would recover the amounts in accordance with the law.

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• 2008 (7) TMI 1118
  
  The appeal was filed against a penalty imposed for contravention of Foreign Exchange Regulation Act, 1973. The appellant failed to comply with the pre-deposit order despite leniency shown by the Tribunal. The appeal was dismissed, and the record was consigned to the Record Room.

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• 2008 (7) TMI 1117
  
  The appeals were filed against a penalty order for failure to provide proof of foreign exchange utilization. The Tribunal dismissed the appeals due to delay in filing beyond 90 days and non-compliance with the order to make a pre-deposit of the penalty amount. The appeals were dismissed for non-compliance with the conditional judicial order.

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• 2008 (7) TMI 1116
  
  Issues:
  Challenge to Adjudication Order imposing penalty for failure to realize and repatriate export proceeds in contravention of FER Act, 1973.
  
  Detailed Analysis:
  
  1. The appellants challenged the Adjudication Order imposing a penalty for failure to realize and repatriate export proceeds in contravention of sections 18(2) and 18(3) of the FER Act, 1973. Despite being permitted to deposit a certain amount within 60 days, the appellants failed to appear or be represented, leading to the disposal of the appeal on merit based on available records within the stipulated time frame under FEMA, 1999.
  
  2. The appellants contended that they took all reasonable steps to realize outstanding export proceeds, citing various challenges faced such as delay in shipment and bankruptcy of foreign buyers. They approached the U.S. Bankruptcy Court for write-off after pursuing the outstanding amount diligently. However, the respondent argued that the appellants failed to prove their efforts within the prescribed period and did not follow RBI's advice to approach for the status of outstanding payments, leading to a clear contravention of sections 18(2) and 18(3) of the FER Act.
  
  3. The legal analysis of sections 18(2) and 18(3) of the FER Act highlighted the requirement for RBI permission to secure payment for exported goods and the adverse legal presumption against exporters failing to take reasonable steps to recover proceeds. The judgment cited a Supreme Court decision emphasizing the subjective nature of "reasonable" actions in such cases.
  
  4. The tribunal found that the appellants' actions did not displace the adverse presumption against them under section 18(3) as they failed to provide evidence of timely efforts to recover export proceeds within the prescribed period. The failure to approach relevant authorities like the Indian Embassy or RBI earlier, coupled with the lack of granted write-off, supported the decision to uphold the penalty imposed.
  
  5. Regarding the quantum of penalty, the tribunal deemed it appropriate given the contravention and the penalty amount in relation to the offense. The penalty was considered neither harsh nor excessive, warranting no intervention by the tribunal. Consequently, the appeals were dismissed for lacking merit, with the pre-deposited amount to be appropriated towards the penalty, and the appellants were directed to deposit the remaining penalty within a specified timeframe.
  
  This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by both parties, the legal provisions applied, and the tribunal's reasoning leading to the final decision.

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• 2008 (7) TMI 1115
  
  Issues Involved:
  1. Contravention of Section 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973.
  2. Validity of the evidence and documents seized.
  3. Applicability of the Remittance of Foreign Exchange (Immunities) Scheme, 1991.
  4. Burden of proof and circumstantial evidence.
  5. Quantum of penalty imposed.
  
  Issue-wise Detailed Analysis:
  
  1. Contravention of Section 9(1)(f)(i) of the Foreign Exchange Regulation Act, 1973:
  The appellants were penalized for making payments to Niranjan J. Shah without the general or special exemption from the RBI, in consideration for the acquisition of US dollars outside India. The tribunal confirmed that the appellants had contravened Section 9(1)(f)(i) of FERA, 1973, by making payments in Indian Rupees to Niranjan Shah, who arranged for foreign exchange outside India.
  
  2. Validity of the evidence and documents seized:
  The investigation initiated by the Income Tax Department led to the seizure of documents and computer floppies from Niranjan Shah's residence, which indicated transactions between the appellants and Niranjan Shah. The documents included account details under "Niranjan's $ A/c" and a list of 36 persons, including the appellants, who received remittances. The tribunal found that the seized documents and the interconnected transactions were valid evidence to establish the contravention.
  
  3. Applicability of the Remittance of Foreign Exchange (Immunities) Scheme, 1991:
  The appellants claimed immunity under the Remittance of Foreign Exchange (Immunities) Scheme, 1991, asserting that the remittances were gifts declared in their income tax returns. However, the tribunal held that the statutory declarations of gift cheques and their acceptance by the bank and income tax officers could not override the provisions of FERA. The scheme did not apply to the facts of this case, as the appellants failed to prove that the foreign exchange was received as a gift without consideration.
  
  4. Burden of proof and circumstantial evidence:
  The tribunal emphasized the importance of circumstantial evidence and the burden of proof on the appellants. It referred to several Supreme Court judgments, highlighting that circumstantial evidence must form a complete chain to prove guilt. The tribunal concluded that the appellants failed to discharge their burden of proving that the foreign exchange was received as a gift without any consideration. The presumption of fact under Section 114 of the Evidence Act and the principle of special knowledge under Section 106 of the Evidence Act were applied against the appellants.
  
  5. Quantum of penalty imposed:
  The tribunal considered the gravity of the charges and the substantial amount involved in the contravention. Although the appellants argued for a reduction in the penalty based on a previous tribunal judgment, the tribunal decided to reduce the penalty to 75% of the total imposed amount, considering that the amount was declared with the income tax assessing officers and was not meant for hawala payments. The appellants were directed to deposit the balance amount within 15 days, failing which the respondent could recover the same in accordance with the law.
  
  Conclusion:
  The tribunal upheld the charges against the appellants for contravening Section 9(1)(f)(i) of FERA, 1973, based on valid evidence and circumstantial proof. The applicability of the Remittance of Foreign Exchange (Immunities) Scheme, 1991, was rejected, and the burden of proof lay with the appellants, which they failed to discharge. The penalty was reduced to 75% of the total amount, considering the specific circumstances of the case.

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• 2008 (7) TMI 1114
  
  Issues:
  1. Appeal against penalty imposed for failure to realize and repatriate outstanding export proceeds.
  2. Interpretation of Sections 18(2) and 18(3) of FER Act, 1973.
  3. Application of legal principles regarding regulatory offenses and purposive construction.
  
  Analysis:
  1. The appeal was filed against a penalty imposed on the appellant for failure to realize and repatriate outstanding export proceeds, contravening Section 18(2) and 18(3) of the FER Act, 1973. The appellant, a partner of M/s S.K. Works, exported garments to U.S. buyers but could not recover payments due to various reasons, including the foreign buyer's bankruptcy. The appellant contended that all reasonable steps were taken to recover the outstanding proceeds, including approaching the RBI for write-off. The respondent argued that the appellant continued exporting goods without taking steps to recover the payments, establishing a contravention of the Act.
  
  2. Section 18(2) of the FER Act prohibits actions that delay payment for exported goods without RBI permission. Section 18(3) creates a presumption of non-compliance if payment is not received within the prescribed period. The Tribunal noted that substantial amounts were still outstanding, and the appellant's argument that certain GRs were eligible for write-off under RBI circular was not tenable in the proceedings. The appellant's argument that contravention must be deliberate for penalty imposition was rejected, citing various case laws.
  
  3. The Tribunal emphasized the regulatory nature of the FER Act, aimed at conserving foreign exchange resources. It highlighted the need for a purposive construction of the Act to protect the Indian economy. Referring to legal precedents, the Tribunal emphasized that penalties under the Act do not require deliberate contravention but strict compliance. The Tribunal dismissed the appeal, upholding the penalty and directing the appellant to pay the balance amount within a specified period, failing which enforcement action would be taken.
  
  This detailed analysis covers the issues raised in the judgment, including the interpretation of relevant legal provisions and the application of regulatory principles in deciding the appeal against the penalty imposed.

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• 2008 (7) TMI 1113
  
  Issues Involved:
  1. Contravention of Section 8(1) and 8(2) read with 64(2) of the Foreign Exchange Regulation Act, 1973.
  2. Validity of the statements and retraction by the appellant.
  3. Delay in issuing the second Show Cause Notice (SCN).
  4. Reliance on documents and statements of co-accused.
  5. Definition and application of abetment under the Foreign Exchange Regulation Act, 1973.
  
  Detailed Analysis:
  
  1. Contravention of Section 8(1) and 8(2) read with 64(2) of the Foreign Exchange Regulation Act, 1973:
  The appellants were charged with acquiring and converting Bangladesh Taka into Indian currency without the permission of the Reserve Bank of India (RBI), contravening Section 8(1) and 8(2) of the Foreign Exchange Regulation Act, 1973 (FERA). The first Show Cause Notice (SCN) dated 26.09.94 alleged that the appellants acquired Bangladesh Taka equivalent to Rs. 3,90,147, including a seized amount of Rs. 3 lakhs, and converted it at rates not prescribed by the RBI. The second SCN dated 04.05.02 alleged the acquisition of Bangladesh Taka equivalent to Rs. 22 lakhs and its conversion into Indian currency.
  
  2. Validity of the Statements and Retraction by the Appellant:
  The appellant S.N. Tambakuwala's statement was recorded under Section 40 of FERA, admitting involvement in the illegal currency transactions. He later retracted his statement, alleging coercion and threat. However, the Tribunal found the retraction unsubstantiated, noting that the appellant failed to link his injuries to the alleged coercion and did not follow up with any specific complaints. The Supreme Court's observations in KTMS Mohd v. UOI and K.I. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin, were cited, emphasizing that the burden of proving coercion lies on the appellant, which was not discharged in this case.
  
  3. Delay in Issuing the Second Show Cause Notice (SCN):
  The second SCN was issued after a delay of about 8 years. The Tribunal rejected the appellants' contention that the delay prejudiced their rights, noting that there is no bar of limitation for taking cognizance of such offences under FERA. The Tribunal cited the Supreme Court's observations in State of Haryana v. Chandra Mani, highlighting that delays by the State, due to bureaucratic processes, should not be equated with delays by individuals, particularly in cases involving national interest.
  
  4. Reliance on Documents and Statements of Co-Accused:
  The appellants argued that the loose sheets recovered from S.N. Tambakuwala's custody were not reliable evidence. The Tribunal dismissed this argument, noting that the transactions were shrouded in secrecy, and detailed accounts were not expected. The seized documents were corroborated by circumstantial evidence. The Tribunal also upheld the use of statements by co-accused, citing the Supreme Court's ruling in Naresh Sukhawani v. Union of India, which allows such statements as substantive evidence if they inculpate both the maker and another person.
  
  5. Definition and Application of Abetment under the Foreign Exchange Regulation Act, 1973:
  S.N. Tambakuwala was charged with abetting the contraventions committed by his maternal uncles, Surendra Kumar Sah and Shyam Sunder Sah. The Tribunal referred to Section 107 of the Indian Penal Code and the Supreme Court's observations in State of Madhya Pradesh v. Mukesh, explaining that abetment involves active complicity. The Tribunal found that S.N. Tambakuwala's actions facilitated the illegal transactions, thus constituting abetment. The Tribunal also referred to the Maharashtra Control for Organised Crime Act, 1999, to emphasize that assistance to organized crime syndicates constitutes abetment.
  
  Conclusion:
  The Tribunal confirmed the penalties imposed by the Adjudicating Officer, finding the appellants guilty of contravening the provisions of FERA. The appeals were dismissed, and the appellants were directed to deposit the balance penalty amount within 15 days. The Tribunal's decision was based on substantial evidence, including corroborated statements and seized documents, and it emphasized the importance of addressing economic offences to protect national interests.

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• 2008 (7) TMI 1112
  
  Issues Involved:
  1. Contravention of Section 9(1)(f)(1) of the Foreign Exchange Regulation (FER) Act.
  2. Admissibility and voluntariness of admissional statements.
  3. Corroboration of retracted statements.
  4. Burden of proof and standard of proof.
  
  Issue-wise Detailed Analysis:
  
  1. Contravention of Section 9(1)(f)(1) of the FER Act:
  The appellants were penalized for making payments in Indian currency amounting to Rs. 6,42,721 to Niranjan J. Shah as consideration for the acquisition of foreign currency (US dollars) outside India without any general or special permission from the Reserve Bank of India (RBI). The penalties imposed were Rs. 1,65,000 each. The adjudication order No. ADJ/94/B/SDE/PKA/2001 dated 24-4-2001 by the Special Director of the Enforcement Directorate was challenged in these appeals.
  
  2. Admissibility and Voluntariness of Admissional Statements:
  The appellant in appeal No. 250/01 admitted to receiving foreign currency in lieu of Indian currency. The Tribunal held that admissional statements made before officials of the Enforcement Directorate are admissible under Sections 25 and 26 of the Indian Evidence Act, as these officials are not considered police officers. The Tribunal emphasized that mere allegations of threat and coercion are insufficient without some evidence to support such claims. The Tribunal referenced K.T.M.S. Mohd. v. Union of India [1992] 3 SCC 178, stating that the voluntary nature of any statement is crucial, and retraction alone does not render a statement involuntary or unlawfully obtained.
  
  3. Corroboration of Retracted Statements:
  The Tribunal held that retracted admissional statements are admissible and can be relied upon to determine guilt. The Tribunal cited K.J. Pavunny v. Assistant Collector (HQ), Central Excise Collectorate, Cochin [1997] 3 SCC 721, which established that retracted confessions can be used to prove the prosecution's case if they are found to be voluntary and true. The Tribunal also referenced Naresh J. Sukhwani v. Union of India 1996 SCC (Cri.) 76, which held that statements recorded by Customs officials can be used against a co-noticee if the person making the statement admits guilt.
  
  4. Burden of Proof and Standard of Proof:
  The Tribunal reiterated that the standard of proof in quasi-criminal proceedings does not require mathematical precision. It cited Collector of Customs v. D. Bhoormull AIR 1974 SC 859, which stated that the prosecution need only establish a degree of probability that a prudent person would believe in the existence of the fact in issue. The Tribunal also referenced State of West Bengal v. Mir Mohammad Omar [2000] 8 SCC 382, which discussed the burden of proof when certain facts are within the personal knowledge of the accused.
  
  Conclusion:
  The Tribunal dismissed the appeals, holding that the appellants were correctly found guilty of contravening the FER Act. The penalty amount was deemed reasonable and correct, and the pre-deposited penalty amounts were appropriated towards the penalties. The impugned adjudication orders were sustained and maintained.

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• 2008 (7) TMI 1111
  
  The appeal was dismissed by the Appellate Tribunal for Foreign Exchange, New Delhi due to non-compliance with a conditional judicial order regarding pre-deposit of penalty amount. The appellant failed to comply with the order despite notice, and no bona fide was shown in compliance. The Tribunal stated that legislation cannot be re-casted or re-written due to harsh consequences. The appeal was dismissed for non-compliance with the conditional judicial order.

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• 2008 (7) TMI 1110
  
  Issues:
  - Appeal against Adjudication Order imposing penalty for contravention of Foreign Exchange Regulation Act, 1973
  - Non-compliance with pre-deposit order despite dismissal of Writ Petition
  - Obligation of appellants to file appeal along with penalty amount unless dispensation granted
  
  Analysis:
  The judgment pertains to an appeal filed against an Adjudication Order imposing a penalty for contravention of the Foreign Exchange Regulation Act, 1973. The appellant, Sultan Syed Ibrahim, failed to comply with the pre-deposit order despite the dismissal of a Writ Petition challenging the same. The Member of the Appellate Tribunal highlighted the statutory obligation of appellants to file an appeal along with the penalty amount, unless dispensation is granted. The Tribunal emphasized that the appellant's non-compliance with the order, even after the High Court's decision, demonstrated a lack of bonafide on his part.
  
  The Tribunal referred to Section 52(2) of the FERA, 1973, which outlines the procedure for filing an appeal and the requirement of depositing the penalty amount within a specified period. The provision allows for the Appellate Board to entertain appeals beyond the initial period if sufficient cause is shown, and to dispense with the deposit in cases of undue hardship. However, in this case, the appellant did not deposit the penalty amount despite the dismissal of the Writ Petition, indicating a deliberate attempt to evade responsibility under the Act.
  
  The Member of the Tribunal, in agreement with the arguments presented by the Respondent's counsel, concluded that the appeal should be dismissed due to the appellant's non-compliance with the statutory scheme regarding the pre-deposit of the penalty amount. The judgment emphasized the importance of adhering to judicial orders and statutory requirements, ultimately leading to the dismissal of the appeal. The record of the appeal was ordered to be consigned to the Record Room, marking the conclusion of the case.

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