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TMI Blog2009 (11) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty by the Appellate Tribunal for Foreign Exchange, New Delhi (hereinafter referred to as Appellate Tribunal), dated 9-10-2003 in Appeal No. 137 of 2003. 2. The brief facts of the case are as follows :- 2. 1A charge was issued for contravention of Section 82 r/w Section 18(3) of the Foreign Exchange Regulation Act, 1973 (for short 'FERA') by the Deputy Director Enforcement, Chennai. The second respondent exported garments in the year 2000 and failed to realize proceeds to the tune of US Dollars 52, 739.46 within the prescribed time limit and thereby contravened the provisions of Section 18(2) of the Act. The Director of the Company is liable for the conduct of the business of the company during the relevant period. A show cause notice was issued to the respondents, however, they did not file any reply statement. 2.2 The adjudication proceedings were held against the noticees and on close of the enquiry, the noticee-company was found guilty of the charges. The Director was found guilty invoking Section 68(1) of the Act. Hence, a consolidated penalty of Rs. 5 lakhs was imposed on them. The respondents carried the matter in appeal before the Appellate Tribunal for Foreign Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale thereof, that such person has not taken all reasonable steps to receive or recover the payment for the goods as aforesaid and he shall accordingly be presumed to have contravened the provisions of sub-section (2)." 4. A preliminary objection was raised by the respondents before the Appellate Tribunal that the export of ready-made garments between 2-2-2000 and 23-5-2000 would be covered by FERA and the steps were taken under the Act only after passing of FEMA and hence, it has to be construed that the provisions of FEMA would come to play and since charge was issued under FERA, it is not maintainable. It was also argued before the Tribunal by these respondents that the six months period prescribed in the Central Government notification expired by 22-8-2000 and 23-11-2000 in respect of exports and the FEMA came to effect from 1-6-2000 and that the investigation commenced on 31-7-2001 and the charge under FERA has no enforceability. 5. The adjudicating authority, namely, the Deputy Director of Enforcement had not furnished any reasons on this aspect. However, the Tribunal has handed down a fitting reply stating that it is clear that any offence committed under the repealed Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the expiry of six months stipulated period after the export was made. 9. There is no material to show that the respondents had been taking sincere and reasonable efforts to realise the proceeds. It is only after the expiry period, the respondents addressed the concerned authorities. In this regard, the phraseology employed in sub-section (3) of Section 18 of the Act has to be borne in mind which goes to show "that such person has not taken all reasonable steps to receive or recover the payment for the goods". 10. It is the intention of the Legislature that the person concerned, who takes all reasonable steps to recover the payment of goods with sufficient materials, if it is stated that he took such steps, it is of no avail. The term "reasonable" has been demonstrated in the Law Lexicon, written by P. Ramanatha Aiyer, reprint in 2004, as follows :- "(i) Reasonable: It would be hard to give an exact definition of the word 'Reasonable', Reason varies in its conclusions according to the idiosyncrasy of the individual and the times and circumstances in which he thinks. The reasoning which built up the old scholastic logic, sounds now like the jingling of a child's toy. But man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent is not liable to be interfered with." 13. In Director of Enforcement v. M.C.T.M. Corporation Pvt. Ltd. and others, reported in (1996) 2 Supreme Court Cases 471= AIR 1996 SC 1100, the Supreme Court is of the view that mens rea (as is understood in Criminal Law) is not an essential ingredient for holding a delinquent liable to pay penalty under Section 23(1)(a) of FERA, 1947 for contravention of the provisions of Section 10 of FERA, 1947, that penalty is attracted under Section 23(1)(a) as soon as contravention of the statutory obligation contemplated by Section 10(1)(a) is established. 14. In the said decision, while discussing about the intention of the Legislature at that time of legislating statute, the Supreme Court has dealt with the legal importance of Sections 10 and 23 of FERA, which are as follows :- "10. Duty of person entitled to receive foreign exchange etc. - (1) No person who has a right to receive any foreign exchange or to receive from a person resident outside India a payment in rupees shall, except with the general or special permission of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which has effect of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 001 (4) CTC 609, the above-said decisions cited supra, i.e. in M/s. MCTM Corporation Pvt. Ltd. and M/s. S.K. Senjan Chettiar's cases have also been referred and it is observed that in Section 18(2) and 18(3) of the Act, nowhere it is mentioned mens rea. In other words, once the factum of contravention is found, the offence is complete. 16. The following points are discernible as regards the circumstances and facts of the case and on the legal implication on the subject :- (i) The goods were exported in March and May, 2000. (ii) The statutory limit of six months got expired in August and November, 2000. (iii) No communication within the prescribed period of six months to the authorities concerned by the respondents. (iv) only in December, 2000, the Company wrote a letter outside the period of limitation. (v) No material to show that reasonable steps were taken to recover export proceeds. (vi) In order to make a person liable for charge under Sections 18(2) and (3) presence of element of mens rea is not a criterion and once contravention is noticed then he may be clamped with penalty. 17.The factual circumstances would indicate that there was no sincere nor reasonabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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