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TMI Blog2019 (10) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... lished that there was active complicity and intentional aiding. Counsel has referred the reported case of Shri Ram vs. State of U.P. AIR 1975 SC 175 paragraph 6. It is alleged that it is not sufficient that an act on the part of the alleged abettor happens to facilitate the commission of the offence. Therefore no case of abetment is sustainable against the Appellants. The Adjudicating Authority has failed to show that the ingredients of abetment have been fulfilled in order to hold the Appellant guilty of abetment. As further submitted that as far as the Appellant is concerned the money was transferred from an account in India to another account maintained in India. The fact that the said money was later on transferred abroad was not within the knowledge of the Appellants. The same was not a part of the transaction over which the Appellant had any control. It is not the case of the respondents that the Canara Bank had cleared the cheque which was to be credited to a convertible account. It is pointed out that the ANZ Grindlays Bank presented the drafts to the Appellant for payment in normal clearance without being accompanied by the required form A3 and in the circumstances t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 57/MUM/2008 - - - Dated:- 20-9-2019 - Justice Manmohan Singh Chairman For the Appellant : Shri Debarshi Bhuyan, Advocate For the Respondent : Shri Ashok Kumar Panda, Sr. Advocate, Shri Aniruddha Purushotham, Advocate, Ms. Sumita Hazarika, Advocate, Shri Manoj Paikaray Ispita Behera, Advocates JUDGEMENT FPA-FE-10-13, 50-57/MUM/2008 1. The twelve appeals have been filed by Canara Bank and its concerned officers against the common Adjudication Order No. ADJ/64- 67/B/SDE/KNR/2007/FERA/4783 passed by the Dy. Director, Enforcement Directorate. Vide the impugned Order dated 30.11.2007, the Adjudicating Authority confirmed the Show Cause Notices and imposed penalties against the appellants for the contravention of Sections 6(4), 6(5) r/w Sections 49, 8(1), 9(1)(a) and 9(1)(e) along with Para 10.3 (ii), 10.12 10.17 of Chapter 10 of the Exchange Control Manual 1987 Vol. 1 issued by RBI. 2. It was alleged by the respondent no. 1 was that the contravening act of Canara Bank was that it had cleared four cheques issued by BFEA (which were denominated in non-convertible In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n Show Cause Notice No. 48. 3.4. Appeal Nos. 12, 55 57/2008 against imposition of penalty of ₹ 12,50,000/-, ₹ 75,000/- and ₹ 75,000/- against appellant Canara Bank, S.A. Laxmi and P. Upadhyaya respectively on the allegations contained in Show Cause Notice No. 53. 4. The four Show Cause Notices were issued to Canara Bank and its officers in respect of the four cheques cleared by them. In other respects, the Show Cause Notices are identical, and for convenience, SCN No. 38 is taken up for establishing the facts of the case and analysis. 5. The Bank of Economic Affairs of the USSR issued cheque No. 001980 dated 12.07.91 for ₹ 3,00,00,000/- favouring ANZ Grindlays Bank sub account Giro Bank on Canara Bank, Bombay. The said Cheque was deposited personally by Kuldip Singh Sood of M/s. Transworld International to the ANZ Grindlays Bank, Bombay on 21.08.91. 6. Canara Bank, Bombay debited the account of BFEA of USSR and credited the account of ANZ Grindlays Bank, Bombay. 7. It is the case of the respondent that on receipt of the said amount of ₹ 3,00,00,000/- from Canara Bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the transferor as well as transferee ADs are responsible for ensuring that the transactions put through the Vostro accounts, are in conformity of the Exchange Control Regulations and the Canara Bank has not complied with the Exchange Control Regulations. 8.4. Considering the seriousness of the matter the RBI had advised the transferor as well as transferee ADs to repatriate the entire amount of ₹ 13,09,07,900.00 in Foreign Exchange at the then prevailing rates i.e. US $ 5,196,506.00. 9. Relevant Statements recorded under Section 40 of the FERA, 1973 : Statements of Shri Anil Bhuse, officer of ANZ Grindlays Bank. His statements were recorded on 29.03.93, 01.02.93, 03.02.93 and 10.03.93. 9.1 He stated that he knows Mr. Kuldip Singh Sood who deposited 4 cheques in the Bank. Cheques were received by him. 9.2. Mr. Sood had introduced himself as a representative of Eastern Suburbs Ltd. and requested to credit those cheques to the account of Giro Bank Plc. London. 9.3. Mr. Sood had deposited one cheque for ₹ 25 million on 1/7/91, one cheque for ₹ 30 million on 21/8/91 and two cheque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2. He had cleared the cheques no. 001980, 001981, 001982 of BFEA of USSR by debiting BFEA account with them. 11.3. These cheques were presented in clearing without any covering letter. 11.4. He is not aware that these amounts were credited to Girobank and cleared these cheques in ordinary course of business. 12. Statement of Shri Kuldip Singh Sood, was recorded on 27/1/93 and 28/1/93. 12.1. He has stated inter-alia that they are in consultancy services. They arrange international as well as domestic finances to needy clients. 12.2. Eastern Suburbs Ltd., UK is one of their clients. He stated that they have not handled any matter on their behalf except that they were deputed to find out the delays for payment at Bombay which were blocked for a considerable long time. 12.3. If some violation of FERA has taken place in these transactions, it is for the ANZ Grindlays Bank to answer and cannot be the responsibility of a professional consultancy service. 12.4. The three drafts mentioned in his letters dated 31/8/91 and 29/8/91 were sent to them by some Russia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he payee is given as GIRO BANK PLC SUB A/C EASTERN SUBURBS LTD . On the face of these cheques it is clear that the funds are going to be credited to NRE account. Thus, there is an illegal omission on the part of the Bank and its employees in clearing these cheques. 14. Counsel for the respondent has referred the decision of the Hon‟ble Supreme Court in the case of State of Madhya Pradesh v. Mukesh , 2006(10) SCALE 346, the Hon‟ble Supreme Court laid down the conditions for attracting clause 3 of Section 107 of IPC causing abetment by aid in: A person, it is trite, abets by aiding, when by any act done either prior to, or at the time of, the commission of an act, he intends to facilitate and does in fact facilitate, the commission thereof would attract the third clause of Section 107 of the Indian Penal Code. Doing something for the offender is not abetment. Doing something with knowledge so as to facilitate him to commit the crime or otherwise would constitute abetment. 15. Any communication or association which has nexus with the commission of organized crime would come within the purview of abetment. It in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank cleared various cheques issued by Russian bank in favour of the M/s Eastern Suburbs Ltd. 16. The case of the appellants:- (a) Vostro Account maintained by Canara Bank, International Division Bench, Mumbai. (b) Vostro Section received 10 cheques that is 8 cheques plus 2 telex transfers, issued by Bank for Foreign Economic Affairs of the USSR (BFEA) from ANZ Grindlays Bank Ltd.-the Presenter Bank. (c ) Cheques issued by BFEA (Bank for Foreign Economic Affairs of the USSR) in favour of ANZ Grindlays Bank Sub Account Girobank PLC. BFEA never instructed the Appellants, nor ANZ Grindlays Bank forwarded form A3 along with draft for being signed by the Appellant and being for submission to RBI. (d) The Contention was raised in paragraph 13, 14 and 18 of the Reply that there was no instructions whatsoever have not at all been dealt with, on the contrary an arbitrary finding without supporting any material is arrived at paragraph 22, which is contrary to the records and contentions. (e ) In the normal Banking course these cheques were honoured. (f) It is a requirement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is no finding of any economic loss to the exchequer. (s) In any event of the matter ANZ Grindlays Bank Ltd. has brought back the money at paragraph 22.2 at page 25 and therefore lenient view has been taken against ANZ Grindlays Bank Ltd. but a heavy fine has been imposed on Canara Bank. (t) One other important factor which the Canara Bank lost sight of is that Canara Bank suffered as it is a huge loss on account of RBI directive to bring back the amount in 2003, when factually the Canara Bank purchased foreign exchange in USD and suffered a loss of ₹ 3 crores as against the exchange rates of 1991. (u) S.A. Laxmi one of the Appellant in the present case was never in the Vostro Department, and had no connection with the transfer at all, only thing the Vostro and the foreign Department in the same building, this contention also was not dealt with by the Adjudicating Authority. (v) There is no finding on this contention of Shri S.A. Laxmi. (w) There is no finding on any overt or covert Acts done by any particular officer nor their Role specified, neither in the Show Cause Notice nor in the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e. the authorized dealer who maintains the nonresident account which is to be credited, is responsible for submission of relative form A1 or A2 to Reserve Bank. To avoid any difficulty being caused to that bank in fulfilling this responsibility, the following procedure should be followed: A cheque or draft received for credit of a nonresident account, unless accompanied by form A1 or A2 (accompanies, where necessary, by a permit issued by Reserve Bank authorizing the transfer of rupees) should not be passed through clearing but sent to bank from whom it was received stating that a non-resident account is being credited and requesting in exchange a pay slip accompanied by form A1 or A2 duly completed by drawer or by his bank on his behalf and supported by the permit issued by Reserve Bank, where applicable. The authorized dealer on whom the cheque or draft is drawn in responsible to Exchange Control for ensuring that (1) Exchange Control regulation have been duly complied with in respect of the particular transaction, in the same manner as if the amount was being remitted abroad through his medium in foreign currency; and (2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he money was transferred from an account in India to another account maintained in India. The fact that the said money was later on transferred abroad was not within the knowledge of the Appellants. The same was not a part of the transaction over which the Appellant had any control. It is not the case of the respondents that the Canara Bank had cleared the cheque which was to be credited to a convertible account. 24. It is pointed out that the ANZ Grindlays Bank presented the drafts to the Appellant for payment in normal clearance without being accompanied by the required form A3 and in the circumstances the Appellant had no reason whatsoever to believe or to apprehend that the proceeds of the said draft were to have been remitted outside India or to be credited to the Vostro account of Girobank Plc. by ANZ Grindlays Bank. 25. It is further stated that the finding reached by the Special Director in his order dated 30.11.2007 in Para 30 clearly shows that at the most the only allegation that can stand against the appellants is that of negligence and not of abetment. Negligence can under no stretch of imagination be raised to a case of abetment. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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