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2015 (2) TMI 1044 - HC - FEMAContravention of Section 9 (1) (b) and (d) of the Foreign Exchange Regulation Act, 1973 - Whether in a case where an offence was punishable with a mandatory sentence of imprisonment, a company incorporated under the Companies Act, can be prosecuted, as the sentence of imprisonment cannot be imposed on the company? - Held that - In view of the decision of the Supreme Court in Standard Chartered Bank's case (2006 (2) TMI 272 - SUPREME COURT OF INDIA), which has also been rendered under the provisions of the Foreign Exchange Regulations Act, the plea of the appellant that on his acquittal in the criminal case, no penalty is imposable on him, does not merit consideration, since the Supreme Court has categorically held that adjudication and prosecution are two independent proceedings and the finding in one is not conclusive in the other. In view of the above decision of the Supreme Court, this Court finds no reason to interfere with the order passed by the Appellate Tribunal. - Decided against appellant.
Issues: Appeal against order of Appellate Tribunal for Foreign Exchange, Contravention of FERA Act, Proper opportunity for representation, Binding effect of criminal court's acquittal on appellate authority.
Analysis: 1. Appeal against Appellate Tribunal's Order: The appellant challenged the Appellate Tribunal's decision partially allowing his appeal. The Tribunal had reduced the penalty imposed on the appellant from Rs. 75,000 to Rs. 50,000. The appellant complied with the pre-deposit requirement, and the Tribunal adjusted the amount towards the penalty. The appellant, dissatisfied with the partial relief granted, filed the present appeal before the High Court. 2. Contravention of FERA Act: The case involved contravention of Section 9 (1) (b) and (d) of the Foreign Exchange Regulation Act, 1973 (FERA Act). The Enforcement Directorate conducted searches leading to the recovery of Indian currency and incriminating chits from a person named Haza Mohideen. The appellant admitted receiving money from an unknown person and handing it over to Haza Mohideen, acknowledging his involvement in hawala transactions. Penalties were imposed on both Haza Mohideen and the appellant, along with confiscation of a sum of Rs. 9 lakhs. 3. Proper Opportunity for Representation: The appellant contended that he was not given a fair opportunity to present his side during the adjudication process. Despite the criminal court's acquittal, penalties were imposed on him by the appellate authority. The appellant argued that the acquittal should have precluded any penalty, emphasizing the importance of a proper opportunity to be heard before adjudication. 4. Binding Effect of Criminal Court's Acquittal: The central issue raised was whether the finding of the criminal court acquitting the appellant should bind the appellate authority in imposing penalties under the FERA Act. The appellant relied on the acquittal to argue against the imposition of penalties, while the respondent cited the Supreme Court's decision in Standard Chartered Bank's case. The Supreme Court's ruling clarified that adjudication and prosecution are independent proceedings, and a finding in one does not bind the other. The High Court, in line with the Supreme Court's decision, upheld the penalties imposed by the Appellate Tribunal, dismissing the appellant's appeal. In conclusion, the High Court dismissed the appeal, upholding the penalties imposed on the appellant under the FERA Act despite the criminal court's acquittal. The Court relied on the principle that adjudication and prosecution are distinct processes, with findings from one not conclusively impacting the other. The judgment emphasized the independence of these proceedings and the lack of binding effect between a criminal court's acquittal and penalties imposed under the FERA Act.
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