9911796707
TMI Blog2021 (2) TMI 1313X X X X Extracts X X X X X X X X Extracts X X X X ..... lt by the petitioner company cannot be deemed to be with the Directorate of Enforcement, that is the prosecuting agency, therefore, the reasonable period to commence the adjudicatory proceeding would be counted from the date when that information was received by the prosecuting agency. As this is a pure question of fact and it is not shown to us that the default had been in the knowledge of the prosecuting agency far in excess of the reasonable period, the issue whether there had been an unreasonable delay in drawing adjudicatory proceeding would have to be raised and dealt with at the appropriate stage of the adjudicatory proceeding and not at this stage, while addressing a challenge to the show-cause notice because the show-cause notice, by disclosing the institution of the complaint and specifying the contravention of the provisions of FEMA, discloses all the necessary requirements to warrant initiation of adjudicatory proceeding against the petitioner. As we find that the complaint discloses all the necessary ingredients to make out a prima facie case with regard to contravention of the provisions of FEMA, the impugned show-cause notice issued for adjudication of that compla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the petitioner to furnish information alongwith documentary evidence in respect of not utilising, within stipulated period, 16 export advances that were received by the petitioner through its authorised dealer during financial years 2003-04 and 2004-05. (v) The petitioner acknowledged the said notice vide letter dated 19.12.2017 and sought two months time to collate relevant documents and information required by the first respondent. (vi) On 7.3.2018, the petitioner received a reminder letter dated 26.2.2018 from the first respondent, by way of last opportunity, to submit the required information/documents to which, vide letter dated 14.3.2018, the petitioner replied by claiming that there were no export advances outstanding in the books of accounts of the petitioner at the end of financial year 2003-04 and 2004-05. However, as the documents and information sought were from a period 13 years ago, further time was sought to substantiate the defence and make further submissions. (vii) Thereafter, on 12.4.2018, the petitioner vide letter to the first respondent reiterated its position that there were no non-utilised advances outstanding in petitioner's books of accounts. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut in the complaint. 3. Sri Shashi Nandan, learned senior counsel, assisted by Sri Rahul Agarwal, appearing for the petitioner, urged that although Section 7 of FEMA requires every exporter of goods to furnish certain information as specified therein and non furnishing of that information may result in a penalty under Section 13 of FEMA but for initiating proceeding for imposition of such penalty, a complaint has to be filed before the Adjudicating Authority, under Section 16(3) of FEMA, within a reasonable period of such contravention, even though no specific period of limitation for filing such complaint has been provided by FEMA. He submitted that the notice dated 17.8.2017 and the subsequent notice dated 5.12.2017 issued to the petitioner company by the first respondent does not disclose the date as to when the Directorate of Enforcement came to know of non-utilisation of export advances taken by the petitioner company. It has been urged that in absence of disclosure of the date as to when information with regard to non-utilisation of export advances taken by the petitioner company was received by the Directorate of Enforcement, the notice is defective as it fails to disclos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orised person as follows: Authorised person means an authorised dealer, money changer, off-shore banking unit or any other person for the time being authorised under sub-section (1) of Section 10 to deal in foreign exchange or foreign securities. 9. Section 7 casts certain obligations on exporters of goods and services. Sub-section (3) of Section 7 provides that every exporter of services shall furnish to the Reserve Bank or to such other authorities a declaration in such form and in such manner as may be specified, containing the true and correct material particulars in relation to payment for such services. Sub-section (1) of Section 7 casts a similar duty on exporter of goods. 10. Section 10 of FEMA, 1999, inter alia, provides in respect of authorisation of any person to be known as authorised person to deal in foreign exchange or in foreign securities, as an authorised dealer, money changer or off-shore banking unit or in any other manner as it deems fit. Sub-section (2) of Section 10 confers power on the Reserve Bank to make such authorisation subject to conditions laid down therein and sub-section (4) thereof, inter alia, casts a duty on the authorised person to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to penalty. 15. Section 16 of the Act deals with appointment of Adjudicating Authority and the process of adjudication on any complaint in writing made by any officer authorised by a general or special order by the Central Government. 16. We have neither been taken through nor we could find any provision in FEMA which may provide a limitation for initiation of the adjudicatory proceeding for imposition of penalty. No doubt, where no provision of limitation is provided then the action is to be taken within a reasonable period. But as to What would be the reasonable period is to depend upon the facts and circumstances of each case, the nature of the Statute, prejudice caused and whether third party rights have been created, etc. 17. In the instant case, the proceedings are against a company. Section 42 of FEMA specifically provides that where a person committing a contravention of any of the provisions of the Act or of any rule, direction or order made thereunder is a company, every person who, at the time the contravention was committed, was in charge of, and was res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authorised dealer to share the information with the relevant authorities. Only when information is received by the prosecuting agency, which in the present case would be the Directorate of Enforcement, that proceedings for penalty might be initiated. 20. The contention of the learned counsel for the petitioner that neither in the investigation process nor in the show-cause notice, the date of receipt of information with regard to contravention of the provisions of FEMA has been mentioned, therefore, the show-cause notice is liable to be quashed because it fails to disclose a jurisdictional fact, cannot be accepted because FEMA and the Rules and Regulations framed thereunder do not fix a time limit within which the proceeding is to be initiated. Under the circumstances, it cannot be said that the show-cause notice fails to disclose a jurisdictional fact necessary to commence adjudicatory proceeding. Rather, the jurisdictional facts necessary to bring adjudicatory proceedings under FEMA, for imposition of penalty, have been adequately disclosed in the impugned notice coupled with the complaint by alleging that the fact of utilisation of specified export advances within the specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er receipt of information in respect of contravention of the provisions of FEMA, 1999, notice was issued calling for information and, thereafter, within 3 years, a complaint was filed and impugned notice was issued soon thereafter. 25. In Adjudicating Officer, Securities and Exchange Board of India (supra), the Apex Court in paragraph 35 of its judgment had not taken any specific decision to close the proceeding on the ground of delay but it only reiterated the general legal principle that when for taking certain action the period of limitation is not prescribed, then such action must be taken within a reasonable time. As to what would be the reasonable time would depend upon the facts and circumstances of the case, nature of the default/statute, prejudice caused, whether the third party rights had been created, etc. 26. In the instant case, as we have already noticed, the information in respect of default by the petitioner company cannot be deemed to be with the Directorate of Enforcement, that is the prosecuting agency, therefore, the reasonable period to commence the adjudicatory proceeding would be counted from the date when that information was received by the prosecutin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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