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TMI Blog1982 (5) TMI 164X X X X Extracts X X X X X X X X Extracts X X X X ..... for having dealt in foreign exchange in contravention of various provisions of the Act. After adjudication, Mrs. Mehta was found guilty of one charge only; Mrs. Mehta, however, was found guilty in respect of the charges covered under four show-cause notices. The Board, while maintaining the order of the director on three charges, set aside his conviction and penalty for the offence covered under show cause notice No. 1. For the remaining charges he was directed to pay penalty of Rs. 5,000 on each count. Mrs. Mehta appeal, however, was rejected and the penalty of Rs. 5,000 imposed upon her was maintained. The director proceeded on the basis that the appellants were foreign nationals who not being domiciled in India were entitled to maintain and operate bank accounts abroad by virtue of the Reserve Bank Notification No. FERA/23/47/RB, dated July 8, 1947. It was further held by him that out of those accounts or credit funds, they were permitted to make any payment to or credit of any person resident outside India. The prohibition imposed by section 5(1)( a ) of the Act was not applicable as by virtue of another notification of the Reserve Bank of India (No. RBI(FERA) 119/53-RB dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The appellants are not Indian citizens. Mr. Mehta was born in Gujarat in the year 1921 but had lived in Uganda as a child. He acquired British citizenship and passport in the year 1947. Thereafter, he migrated to Switzerland; he became a permanent resident of that country and was so declared by the Swiss Government. It appears that he acquired immovable property of considerable value and was also maintaining bank accounts in that country and also in England. In October, 1968, Mr. Mehta came to India to take up an appointment as Managing Director of Saurashtra Cement and Chemical Industries Limited. It was stated at the bar that the said company is a Government company. From the judgment under appeal, it appears that his initial appointment was for a fixed period of five years. It is not contested that Mr. Mehta was registered as a foreigner under the Registration of Foreigners' Rules, 1939. On receipt of reliable information that Mr. Mehta had despatched on June 29, 1966, a cheque for 700 drawn on the First National City Bank of New York to London, the appellant's office and residence at Bombay were searched, and it was found from the documents recovered that the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank of India the travellers cheques amounting to 940 dollars for converting them into Indian currency. The violation of the said notification is, therefore, not open to challenge irrespective of the fact whether Mr. Mehta was an Indian resident or not. He was a person physically in India. Therefore, the imposition of penalty of Rs. 5,000 on this allegation has to be maintained. I may note here that the Board had set aside the order of confiscation of the said travellers cheques. Thus, the only legal question which arises for consideration is whether the finding that the appellants were residents in India is correct. If they were, the imposition of penalty as imposed by the Director of Enforcement and upheld by the Board is justified. However, at this stage I may note that the learned counsel for the respondents has raised a preliminary objection to the maintainability of these two appeals in this court as under Expln. (1) to section 54 of the Act, "High Court "means" The High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business or personally works for gain". The contention is that the appellants were ordinarily residing at Bomba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase or sell foreign exchange from any person without the permission of the Reserve Bank. The other sections of the Act, viz., sections 5, 8, 9 and 10, etc ., will also be applicable to him subject to the exemption given in the various notifications pursuant to the above notification. " As noticed earlier, the Board has upheld the finding regarding the appellants being residents in India. The Board, however, did not rely on the statement of Mr. Mehta for coming to this conclusion. It was observed: "we do not consider that we would be justified in drawing any conclusion as to the appellant's domicile or residence solely on the basis of any admissions on those issues." The reason for upholding the finding by the Board was that the appellant's stay in India was not purely temporary as he had been living in India since 1960 and, therefore, "he can well be regarded as a person ordinarily resident here ". On this proposition of law, the Board's conclusion appears in paragraph 46 of its order. It reads thus: "The period of Shri Mehta's stay as well as the quality of it, viz ., it being a stay for the purposes of taking up an office in a country wherein he had roots would, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant in the said case was outside India and had contravened the provisions of the Act while in Germany, he was not liable. Negativing the contention, in paragraph 47 of the judgment, the Supreme Court has held as follows (at p. 254 of 33 Comp. Cas.): "It remains to deal with the contention urged on behalf of the appellant that even if it be held that the appellant had made the deposits in question in the Deutsche Bank as a customer, there had been no contravention of section 4(1) of the Act as the prohibition enacted therein is only against lending of foreign exchange by a person who is resident in India and that at the time of the deposits in question the appellant was not in India but in Germany. There is no substance in this contention. The intention of the Legislature was plainly to prohibit all transactions in foreign exchange by persons who are residents of India whether such transactions take place during their actual residence in India or during their sojourn in foreign parts. To hold that the prohibition under the Act does not extend to acts done outside India by residents of India must inevitably lead to large-scale evasion of the Act resulting in its object being d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shows the mind of the legislature. It is relevant to note here the definition in sub-clause (in) of sub-section ( p ) of section 2 of the 1973 Act: "(p) 'person resident in India' means ( iii ) a person, not being a citizen of India, who has come to, or stays in, India, in either case ( a )for or on taking up employment in India; or ( b )for carrying on in India a business or vocation in India; or ( c )for staying with his/her spouse, such spouse being a person resident in India, or ( d )for any other purpose, in such circumstances as would indicate his intention to stay in India for an uncertain period." The emphasis seems to be that those persons who are not citizens of India having come to India to reside for an uncertain period are to be considered as persons resident in India. However, if the stay of a person, not being a citizen of India, is purely temporary or for a certain fixed period, that person would not be covered under the expression "person resident in India". Such a person would not, therefore, be resident of India. The prohibitions and obligations imposed under the Act would not be applicable to that person. It is true that the present definition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 81 of that Act), it was heard and disposed of by the Board at Delhi under the provisions of the 1973 Act. It is no doubt true that now because of the amendment of the Act, the High Court where the appeal lies is the High Court within the jurisdiction of which the aggrieved party ordinarily resides or carries on business. In the present case, however, it is admitted that the appellants are no longer residing in India; they have since left this country. In the facts and circumstances of this case, it is urged on behalf of the respondents that for purposes of filing and prosecuting these appeals, the appellants are ordinarily residents of Bombay. It is admitted that the second appeal provided under the Act of 1947 on a question of law against the Board's decision could be filed in this court. Now, however, it is up to the aggrieved party to file an appeal in the High Court within the jurisdiction of which he resides or carries on business or personally works for gain. Under Expln. II to the said section 54 where the Central Government is the aggrieved party, it has to file an appeal in the High Court within the jurisdiction of which the respondent, or in a case where t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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