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TMI Blog2012 (7) TMI 145X X X X Extracts X X X X X X X X Extracts X X X X ..... i) of the FERA Act - FERA APPEAL NO. 22 OF 2011 - - - Dated:- 5-7-2012 - J.P.DEVADHAR R.Y.GANOO, JJ. Mr.A.J.Rana, Sr. Counsel with Mr. Madhu Patel for the Appellants. Mr. Salil Shah for the Respondents JUDGMENT (PER R.Y.GANOO,J.) : 1. Heard learned Advocates on both sides, Admit. 2. Mr.Salil Shah waives service on behalf of all the respondents. By consent taken up for final hearing. 3. On hearing learned advocates on both sides, following substantial question of law is framed: a) Whether the Tribunal was justified in affirming the imposition of penalty for the alleged contravention of Section 9(1)(f)(i) of FERA 1973 on the ground that the appellants had paid equivalent Indian currency through Mr. Niranjan Shah to a person outside India without any general or special exemption granted by the RBI as a consideration for acquisition of US$ 1,00,000/- ? 4. Being aggrieved by the Order dated 24.4.2011 passed by the Appellate Tribunal for Foreign Exchange (for short said Tribunal) in Review Application Nos. 43 - 46 of 2010 confirming the dated 25.3.2009 passed by said Tribunal in Appeal Nos. 253 - 256 of 2002, the present appeal is filed. 5. Few fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made to payment of the sum of Rs.6,43,476/- by Mr.Prabodh G Mehta, Rs.6,44,260/- by Mrs Jyotsna P. Mehta, Rs.6,44,260/- by Mr. Pravin S. Mehta, Rs.6,43,476/- by Mrs. Chandra P. Mehta to Mr. Niranjan Shah, a person resident in India. It was also alleged in the said notice that each of the aforesaid amount was further transferred to Mr. Nilesh J. Vadhani, a resident in Dubai and the sum of US$ 25,000/- was received by way of foreign remittance by each of the appellant from said Nilesh Vadhani. According the the respondents and as stated in the said show cause notice, receipt of the foreign remittance by each of the appellant amounted to violation of the provisions of the FERA Act. 7. Each of the appellant had shown cause to the said show cause notice by their respective reply and had claimed immunity against any action on account of the said scheme. It was the contention of each of the appellant that each of the appellant had received foreign remittance by taking the benefit of the said scheme and as such no action should be initiated against them. 8. The cause shown by each of the appellant was considered by the Special Director. The Special Director passed an order dated 24.4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each of the appellant was protected from any action for having received the said foreign remittance. He took us through the provisions of the immunities granted to a person who receives the remittance under the said scheme framed under the said Act being immunities prescribed under Section 3 of the said Act. He, therefore, submitted that since foreign remittance was received under the said scheme, the action initiated by the respondents in as much as issuance of show cause notice calling upon the appellants to show cause as to why action should not be initiated against them under Section 51 of the FERA Act was not maintainable. 14. Learned Senior Counsel Mr. Rana submitted that it was the consistent stand of the appellants before the Special Director as well as before the Chairperson of the said Tribunal that each of the appellant had received remittance as per the said scheme and therefore no action could have been initiated against each of the appellant. He took us through the text of the show cause notice and submitted that the respondents have admitted that each of the appellant had paid a sum of Rs.6 lakhs and odd amount to Mr. Niranjan Shah, a person resident in India. Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd submitted that the account books and the CDs seized from the possession of Niranjan Shah clearly indicate that there was a nexus between each of the appellant, Niranjan Shah and Mr. Vadhani in regard to the transaction namely receipt of Rs.6,44,000/- and odd from each of the appellant by Mr. Niranjan Shah. He also submitted that there was transfer of money by Mr. Niranjan Shah to Mr. Vadhani, and Mr. Vadhani had in turn sent US$ 25000 to each of the appellant. Learned Advocate Mr. Shah had submitted that in the records which were seized from Mr. Niranjan Shah, a list containing names of 36 persons was found, who had paid various amounts to Mr. Niranjan Shah and the name of each of the appellant is found in the said list. He further pointed out that the Special Director, on consideration of the entire record came to the conclusion that Mr.Vadhani had arranged to remit the said amount to each of the appellant against receipt of compensation in Indian rupees. Mr. Shah submitted that on account of the arrangement arrived at between each of the appellant, Mr. Niranjan Shah and Mr. Vadhani the immunities mentioned in the said Act were not available to the appellants. Learned Advocate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid a sum of Rs.6,40,000/- and odd amount to Mr. Niranjan Shah. It is common ground that each of the appellant has received US$ 25000 from Bank of Baroda, Vile Parle (East), Mumbai 400 057. Each of the appellant had furnished declaration under the said scheme. If these are the facts, merely because each of the appellant had paid a sum of Rs.6,40,000/- and odd to Mr. Niranjan Shah, a resident of India, would not be in violation of provisions of the said Act and in particular Section 9(1)(f) (i) of the FERA Act. 19. We have gone through the order passed by the Special Director. It is the stand of the respondents that investigations were carried out and record was seized in the raid conducted by the Income Tax Department and on investigation it was found by the respondents that the name of each of the appellant was found in the list maintained by Mr. Niranjan Shah. It was also seen in the said record that each of the appellant is said to have paid Mr. Niranjan Shah Rs.6,40,000/- and odd and the said amount is said to have been transferred to Mr.Nilesh Vadhani, a resident of Dubai and in lieu of the said adjustment between Mr. Niranjan Shah and Mr. Nilesh Vadhani each of the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of the appellant. The said chairperson was wrong in accepting the stand taken by the Special Director while passing the order of penalty. It appears that the said chairperson was impressed by the fact that between the appellants, Niranjan Shah and Mr. Nilesh Vadhani an arrangement was arrived at ultimately to get US dollars as has happened in the present case. In our view, the said chairperson did not take into consideration the effect of the said Scheme. In our view, the conclusions drawn by the said chairperson in ultimately confirming the order passed by the Special Director were wrong. 24. A special reference will have to be made to the finding recorded by the learned Chairperson of the said Tribunal in paragraph 7 of the order dated 24.2.2011 in Review Applications. While deciding the review applications the learned Chairperson in paragraph 7 has held that each of the appellant had paid Indian Ruppees out of India. This finding recorded in paragraph 7 of the said order dated 24.2.2011 is contrary to the record inasmuch as it is the case of the Enforcement Directorate itself that each of the appellant had paid Rs.6,44,000/- and odd amount to Mr. Niranjan Shah, a person resi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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