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TMI Blog2009 (4) TMI 915X X X X Extracts X X X X X X X X Extracts X X X X ..... e the Directors of the petitioner No. 1. The respondent No. 1 is Union of India. The respondent No.2 is the Chief Enforcement Officer in the Enforcement Directorate in FEMA, 1999 and is working under the direct control of respondent No. 1. 4. It is stated that the Foreign Exchange Regulation Act, 1973 (hereinafter referred to as FERA) was repealed and was substituted by the Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA). The FEMA came to into force on 1.6.1999. The respondent No.2 had filed a complaint against the petitioners under Section 56 of FERA, 1973 on the ground that the petitioners have not put in reasonable efforts to receive or recover the export outstanding amount to the tune of ₹ 2,00,15,984/- under the exports made under various GR/RF forms for the alleged violations of Section 18(2) and 18(3) of FERA, 1973. 5. Learned counsel for the petitioner submits that the present complaint is a gross abuse of the process of law and the same has been filed by suppressing and withholding material facts. He submits that 31.05.2002 was the last date when the complaint under Section 56 of FERA could be filed and taken cognizance of. The responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outstanding bills and the bill amounts with respect to consignments. The communication also detailed that a suit for recovery was instituted against M/s.Amber International for ₹ 41,12,960/- and the suit was at the final stage and petitioner was hoping for favourable results. With respect to the shipment made to M/s.Kenwright Limited, a legal notice was issued and the petitioner was contemplating filing a suit for recovery, which during the course of hearing learned counsel for the petitioner submits, was filed. 9. As for the shipment made to RLE INC it was brought to the notice of the department that a theft had occurred in the godown of the buyer and various dresses had been stolen and thus the complete garments were not available, although an advance of 20,000 US$ was received at the first instance and thereafter further payment of 19,497 US$ were received out of which one cheque of ₹ 10,000 US$ got bounced due to insufficient funds and the buyer had expressed his inability to pay the balance. With respect to consignment sold to M/s.Om Imports a part payment stood received and further payments were not received due to financial problems being faced by the buyer an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Act and as per Clause C- in Export cases, the prosecution was to be launched in case of non-realization of export proceeds worth ₹ 2.0 crores or more and where non-realization was willful and mala fide. Learned counsel submits that the department has failed to follow the guidelines enshrined in the circular dated 05.07.2001 in view of the fact that the outstanding amount in the present case is ₹ 1.40 crores. In support of his plea with regard to the outstanding amount, learned counsel for the petitioner has drawn the attention of the Court to the statement of account, and certificate issued by the bank of Maharashtra dated 03.10.2002 according to which the outstanding amount for Export Bills of the petitioner is ₹ 1,40,45,882/-. Copy of this certificate has also been placed on record as Annexure P-22. 14. Learned counsel for the petitioner further relies upon a communication dated 14.5.2002 issued by the Reserve Bank of India to the petitioner according to which, the Reserve Bank of India upon considering the case of the petitioner had advised the petitioner to apply for export/write off through the authorized dealer. Relevant portion of the said communicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecovery of the export proceeds, and which it is submitted were duly taken. It would be useful to reproduce ground (E) of the petition, which reads as under: (E) Because the respondents have erred that the petitioners have not taken reasonable steps in as much as it is on record that the petitioners filed recovery suit in the Hon'ble High Court of Delhi and have also taken appropriate steps for recovery, it cannot be said that the petitioners have not taken reasonable steps to recover the amount. The petitioners submit that the combined reading of Section 18(2) and 18(3) of FERA, 1973 envisages inaction or a default on the part of the exporter by refraining from doing anything or refraining from taking any action as envisaged under Sub-Section 2 of Section 18 to take all reasonable steps to receive or recover the payment for the goods. Thus, it is only failure to take reasonable steps which would render the exporter liable for contravention of Section 18(2) and 18(3) of FERA, 1973, and not the fact that the amount has not been realized. In other words, Section 18(2) and 18(3) envisages that if an exporter has taken all reasonable steps to recover the value of the exported go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aint lacks material particulars with respect to the role ascribed to the directors, who have already been made as parties to the complaint. Learned counsel submits that his case would be squarely covered by the decision of the Apex Court in the case of S.M.S. Pharmaceuticals Ltd. Vs. Neeta Bhalla Anr. reported at JT 2005 (8) SCC 89, and the decision of a single judge of this Court in the case of Anil Kumar Vs. State and Anr. reported at (137) 2007 DLT 10. Learned counsel further submits that taking into consideration that neither the opportunity notice nor the complaint has considered the relevant facts on record and there has been a deliberate attempt on the part of the department to suppress material particulars, the complaint is a gross abuse of the process of the Court and thus is liable to be quashed. While relying upon Rukmini Narvekar Vs. Vijaya Satardekar Ors. reported at JT 2000 (8) 11 SC 32 to buttress his argument, learned counsel submits that in exceptional cases, as the case in hand, in view of the wide powers conferred upon it under section 482 Cr.P.C. and Article 226 of the Constitution of India, in order to meet the ends of justice, the Court may look into the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /16.18/0512/2001-02 dated 04.04.02, the petitioner's name was proposed for placing under caution list. Reserve Bank of India did not write off the amount as also nothing had been placed on record to show as to what was the result of the application made by the petitioner. It is contended that the figure of ₹ 2.0 crores has been taken by the department based on a certificate of the bank dated 21.10.1999 and it is on the basis of this statement of account that the respondents had filed the complaint 21. I have heard learned counsel for the parties and given my thoughtful consideration to the matter. The attention of this court was drawn to paras 2, 3 and 4 of the complaint wherein the complainant has stated that during the years 1993-96 M/s.Rare Creations Limited had effected shipments of goods valued at ₹ 2,00,15,984/-. It has further been stated in the complaint that the said M/s.Rare Creations Limited without any permission from Reserve Bank of India took or refrained from taking action which had the effect of securing that the export value of ₹ 2,00,15,984/-. 22. In this case admittedly summons dated 06.05.1999 were issued by the respondents to the pet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be done in very rare cases, i.e. where the defence produces some material which convincingly demonstrates that the whole prosecution case is totally absurd or totally concocted. We agree with Shri Lalit that in some very rare cases the Court is justified in looking into the material produced by the defence at the time of framing of the charges, if such material convincingly establishes that the whole prosecution version is totally absurd, preposterous or concocted. 23. In the counter affidavit as well as during the course of hearing, learned counsel for the respondent has not disputed that the letters referred to hereinabove were issued by the petitioner herein. These communications are material information which was sent to the respondent and the respondent was duty bound to consider the contents of these communications and should have dealt with these letters in the opportunity notice dated 11.02.2002 and further the respondent was bound to consider these communications in the complaint. The opportunity notice is a statutory requirement and not an empty formality. The respondent could not have thus ignored the contents of these communications, which are material and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll 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). 26. A bare reading of this section would show that there are two basic requirements which are to be fulfilled. As per the said sections, the petitioner should have taken reasonable steps to receive or recover the payment of goods and it is only upon failure to take reasonable steps, the exporter would be liable for contravention of section 18 (2) read with sub-section (3) of the Foreign Exchange Regulation Act. It may be noticed that these sections do not provide a mandatory requirement of recovery of the amount due. 27. In the light of the said provisions, in the case in hand, it was for the petitioner to satisfy the department as to the steps taken by the petitioner for recoveries. In the communication dated 17.06.1999, the petitioner had given full detail of the steps which had been taken by them for recoveries. Relevant portion of this communication reads as under: ACTION TAKEN: A suit of recovery amounting to ₹ 41,12,960/- (Rupees Forty One Lac twelve thousand Nine Hundred and sixty) has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken and on what basis it cannot be said that these steps taken are a mere eye wash. In fact, the recoveries made and the decree so passed by this Court clearly show that the petitioner had taken not only reasonable steps taken but all possible steps to institute proceedings and thereafter steps to take recoveries and to gain the fruits of the decree. 30. Taking into consideration the certificate dated 3.10.2002 issued by a nationalized bank (Bank of Maharashtra), the genuineness of which has not been disputed by the department would show that the amounts outstanding were ₹ 1,45,00,882/-. Furthermore, taking into consideration the circular dated 05.07.2001 (copy of which has been placed on record) as per clause 1 (C) of the guidelines, prosecution is to be filed where non-realization of export proceeds is ₹ 2.0 crores or above and where non-realization is willful and mala fide. The sequence of events and undisputed documents placed on record show that the petitioner herein had taken all suitable and reasonable steps which a prudent person would take for recovery and recoveries were actually made, as well as taking into consideration that the basic requirement of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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