9911796707
TMI Blog2024 (8) TMI 665X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Supreme Court in the case supra was on the necessity to examine the statements so as to determine whether it was tendered voluntarily or not. In the present case, the Respondent Directorate has undertaken investigations under FERA, after the initial reference from the Income Tax Department. Also decided in Standard Chartered Bank Ors. [ 2006 (2) TMI 272 - SUPREME COURT ] the two proceedings are independent of each other and the finding on the adjudication is not conclusive on the prosecution under the Act. Thus, we are unable to persuade ourselves that the outcome of the prosecution proceedings should have a binding effect in the present proceedings. Contravention of Section 9(1)(c) of FERA - Nature of the transfer of amount US $ 5 Lakhs from Shri J L Kothari to the Appellant Company - The nationality of Shri J. L. Kothari as US citizen has not been challenged by the Appellants. We also fail to appreciate that how issuance of shares, if any, by M/s Neptune Estate Pvt. Ltd. can fulfill and substitute the obligation of the Appellant Company to issue shares against the receipt of funds from Shri J L Kothari. While the aforementioned Form 2 claims to have issued shares o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rises, Hong Kong. During the course of overseas enquiries, the Counsel General of India, Hong Kong informed that at the given address of M/s Real Fact Enterprises at 901-903, K.Centre, 88, Queens Road, Central Hong Kong, no such company was functioning and the premises was occupied by M/s Yuen Chow Group of Companies and there was no person by name Shri Rakesh Saxena in the said company/ premises. In view of the aforementioned findings, the Ld. Adjudicating Authority has inferred that the remittance was arranged by Shri Vikram Singh himself. While dropping the charge of Section 9(1)(c) of FERA against the Appellant Company for the said remittance of US $ 1 lakh, the Ld. Adjudicating Authority has held the charge of contravention of Section 8(1) of FERA proved against the individual Appellant, Shri Vikram Singh. We have not found anything contrary produced by the Appellant to refute the findings made in the overseas enquiry. Hence, we hold contravention of Section 8(1) by the individual Appellant Shri Vikram Singh. The Ld. Adjudicating Authority has also confiscated US $ 1 lakh under Section 63 of FERA since the amount remained unexplained and tainted. - JUSTICE MUNISHWAR NATH BHA ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judgements of Karan Vir Mehta [1998(97) ELT 42] and Bareily Electrical Supply Co. v/s The Workman [AIR 1972 SC 330]. 4. The Ld. Counsel for the Appellants argued that Para 10 C.13 of Reserve Bank of India (RBI) Manual on Foreign Investment in India in Housing and Real Estate Development permitted NRIs/ OCBs to invest upto 100% in the new issue of equity shares/ convertible debentures of Indian companies engaged in real estate development which covered their case. The transfer of US $ 5 lakhs from Shri J L Kothari, a resident abroad, was in the equity capital of the Appellant Company. The amount was transferred thereafter to the account of another company M/s Neptune Estate Pvt. Ltd. on the explicit instructions of Shri Kothari vide letter dated 15.12.1995. He contended that the nature and purpose of the investment remained unchanged despite the transfer. Since the declaration for direct investment by NRI in Indian company was submitted to RBI for issuance of shares to Shri Kothari the receipt of money from Shri Kothari was in the form of investment. He also stated that the MoU dated 05.12.1995 signed between the Appellant Company and Shri Kothari substantiates this nature of tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Adjudicating Authority cannot vitiate the impugned order. 9. The Ld. Counsel for the Respondent contended that Para 10 C.13 of RBI Manual on Foreign Investment in India in Housing and Real Estate Development permitted NRIs/ OCBs to invest upto 100% in the new issue of equity shares/ convertible debentures of Indian companies engaged in real estate development. However, Shri J L Kothari is a US citizen and not NRI which therefore made the cited Para inapplicable to him. The Appellants failed to show any permission from RBI for such investments. Since the amount of US $ 5 lakhs was transferred to M/s Neptune Estate Pvt. Ltd., no share was in fact issued to Shri J L Kothari by the Appellant Company. There was no amendment made in the MoU to this effect, hence, the MoU became irrelevant and non-est. The Appellants failed to furnish any document to reflect that the purported investment was made on either repatriation or non-repatriation basis. The Appellant Shri Vikram Singh failed to disclose the claim of issuance of shares even as late as 18.02.1997 when his statement was recorded. The statement dated 01.03.1997 of Shri J L Kothari recorded u/s 40 of FERA stated that the remittan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hong Kong. The moot question before us is to determine the nature of the two receipts from abroad as to whether the receipts are in contravention of the provisions of FERA. 12. It is true that certain documents recovered during the proceedings of the Income Tax were referred to the Respondent Directorate for investigations under FERA. Section 72 of FERA provides for the following: Presumption as to documents in certain cases.- Where any document,- (i) is produced or furnished by any person or has been seized from the custody or control of any person, in either case, under this Act or under any other law, or (ii) has been received from any place outside India( duly authenticated by such authority or person and in such manner as may be prescribed) in the course of investigation or any offence under this Act alleged to have been committed by any person, and such document is tendered in any proceedings under this Act in evidence against him, or against him and any other person who is proceeded against jointly with him, the Court or the adjudicating officer, as the case may be, shall- (a) presume, unless the contrary is proved, that the signature and every other part of such document w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings. 14. The MoU dated 05.12.1995, a copy of which is on record, was signed between the Appellant Company and Shri J L Kothari, a resident of Bangkok. Shri R C Jain, the Director of the Appellant Company had signed MoU on behalf of the Appellant Company. The purpose of the MoU as revealed on its perusal, was to have collaboration between the two parties for purchase of 100 acres of land, at Tughlakabad, New Delhi to develop a residential complex. For the said purpose, equal amount of capital had to be contributed by the two parties so as to share profit/ loss in equal proportion. Both the parties were to execute a formal agreement for smoothly carrying out the project reserving the right to withdraw from entering into formal agreement. It is not disputed that the fund of US $ 5 lakhs received from Shri J L Kothari into the accounts of the Appellant Company was transferred to the account of M/s Neptune Estate Pvt. Ltd. on the basis of letter dated 15.12.1995 issued by Shri J L Kothari. It is therefore obvious that within ten days the MoU became infructuous. There is nothing on record to show that further funds flowed in pursuance of the MoU. There is also nothing on record to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S $ 5 Lakhs into the accounts of the Appellant Company for a few days could only have been a temporary loan and that too from a US citizen, resident in Bangkok. The Appellant Company transferred the funds to another company within a short period on the instructions of the person who remitted the funds from abroad. Such transfer jeopardized the MoU dated 05.12.1995, yet it was made which corroborates the absolute control on the funds by its remitter. It is therefore implied that the remitted funds could have only been in the nature of temporary loan to the Appellant Company by a foreign citizen resident abroad, without any general or special exemption of the RBI. Under the circumstances of the present case the acknowledgment of the debt arose from the ready willingness of the Appellant Company to move the funds from its account on the instructions of the remitter abroad, within a short period of its receipt without bothering about the implications on the signed MoU. The company to which the funds were moved was wherein Shri Vikram Singh was a Director. Thus, the Appellant Company became a temporary parking place for the remitted funds. An arrangement which was willingly entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
