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TMI Blog2024 (9) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... different occasions that the non-resident convertible rupee accounts of the Appellant Bank were credited. 19 transactions of credit occurred in its account with the ANZ Grindlays Bank between 24.07.1991 and 22.08.1991 and 1 transaction of credit happened in its account with the Standard Chartered Bank on 28.02.1991. The credits which happened in the ANZ Grindlays Bank were in a short period of about a month. The record reveals that there were telex messages from the Appellant Bank to the ANZ Grindlays Bank for ensuring that the impugned credits were made to its account with the ANZ Grindlays Bank. One of such specific instance has been brought out by the Ld. Adjudicating Authority in the paragraphs cited earlier. It is from the facts and circumstances of a case that the intention, instigation and engagement are to be ascertained. The facts of the present case speak for themselves. The plea that the Appellant Bank was not part of the Bilateral Group but was included in External Group does not help its case. In fact, the Appellants should have been more careful in facilitating credits in their accounts with the ANZ Grindlays Bank and with the Standard Chartered Bank by virtue of not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (presently known as Alliance Leicestar Plc Ltd) and penalty of Rs. 6,64,41,000/- was imposed on Mr. John Baden, former Chief Executive Officer (CEO) of Girobank Plc, UK. 2. Appeal No. FPA-FE-07/MUM/2013 was filed by M/s. Alliance Leicestar Plc Ltd against the Order No. ADJ/11-12/B/SDE/RAJ/2010/FERA dated 11/02/2010 passed by the Special Director, Enforcement Directorate, Mumbai. Vide the Impugned Order dated 11.02.2010 penalty of Rs. 1000/- was imposed on Girobank Plc, UK (presently known as Alliance Leicestar Plc Ltd) and penalty of Rs. 500/- was imposed on Mr. John Baden, former CEO of Girobank Plc, UK. 3. In the Appeals No. FPA-FE-192/MUM/2008 and FPA-FE-195/MUM/2008 this Tribunal vide Order dated 11.09.2008 directed the Appellants to furnish unconditional bank guarantee of the full amount of penalty within a period of 30 days of the date of the receipt of the Order. The Order was complied with. An application with supporting documents, was filed by the Appellants on 03.06.2022 to give effect to change in the name of the Appellant Bank,which was allowed. 4. With respect to the Order No. ADJ/11-12/B/SDE/RAJ/2010/FERA dated 11.02.2010, penalty of Rs. 1000/- and Rs. 500/- were pai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 64 (2) of FERA for having abetted the Standard Chartered Bank, Mumbai. 7. With respect to SCNs No. T-4/19-B/93(SCN 3,7,11, 15,19,24,27,31,35,40,45,50,55,59,64,70,72,78,82) all dated 25.06.1993, the Appellants raised the preliminary issue relating to jurisdiction. Their contention was that the provisions of FERA are not applicable to them as they were not resident in India. The Ld. Adjudicating Authority vide its Order dated 06.08.1997 rejected the contentions of the Appellants on the issue of jurisdiction. The Appellants preferred an Appeal against the decision before the erst while FERA Board, which on 04.11.1997 remanded the case to the Adjudicating Authority to hear the Appellant on the question of jurisdiction. No progress could be made in view of stay by the Hon'ble Supreme Court in a related matter. The Apex Court vide its Order dated 24.02.2006 in Civil Appeal No. 1748 of 1998 finally allowed the Respondent Directorate to hold the adjudication proceedings. 8. Ld. Counsel for the Appellants argued that the Ld. Adjudicating Authority for the Impugned Orders did not first dispose of the question about the jurisdiction in spite of the Order dated 04.11.1997 of the erstwhil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the Appellants also argued that this Tribunal vide Order dated 20.09.2019 allowed the Appeal of the ANZ GrindlaysBank against the order in which it was penalized for the contravention of the said FERA provisions. Since, the charges against the ANZ Grindlays Bank could not be sustained there cannot exist the charge of abetment against the Appellant Bank. The Appellant Bank, being an English bank and having no account in India other than the account in M/s ANZ Grindlays Bank and the account in M/s Standard Chartered Bank, it was in no way responsible to obtain the permissions of the Reserve Bank of India (RBI) for making the aforementioned transactions. The responsibility was that of the ADs to comply with the provisions of the Exchange Control Manual (ECM) then inforce. The Appellant bank was part of the External Group and not of the Bilateral Group for whom the rupee balance could not be converted into foreign exchange without prior approval of Reserve Bank of India (RBI). Ld. Counsel pleaded that the penalties imposed have been excessive. 11. Ld. Counsel for the Respondent stated that the contentions of the Appellants with regard to non compliance to the Order dated 04.11.1997 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the subsequent paragraphs of the said Order. Ld. Counsel for the Respondent therefore stated that the contentions of the Appellants about the jurisdiction, violation of principles of natural justice and charge of abetment do not hold good. The penalties imposed under the Impugned Order dated 09.07.2008 are commensurate to the amount involved in the contraventions. 12. Ld. Counsel for the Respondent argued that the Orders dated 20.09.2019 in the Appeals No. FPA-FE-91-97,105-110,112-114 121-122/MUM/2007 in the matter of ANZ Grindlays Bank and the Appeals Nos. FPA-FE-10-13 50-57/MUM/2008 in the matter of Canara Bank cannot be referred to in the present Appeals. He stated that the aforementioned orders of the Tribunal are pending consideration before the Hon'ble Bombay High Court and hence the same have not attained finality. He cited the following concluding paragraphs of the order dated 20.09.2019 issued in the Appeals filed by ANZ Grindlays Bank and its employees by this Tribunal: '301. There is no disputes that contravention in the above said case have happened. From the entire gamut of the case, no material is found to establish that the banks and its official are invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble rupee account. Similar is the position with respect to the Impugned Order dated 11.02.2010. These transfers to non-resident convertible rupee accounts enabled payments to be made in Foreign Exchange to a person resident outside India. The Exchange Control Manual stipulated that crediting of any amount into the non-resident rupee account is equivalent to remittance in foreign currency from India to a country in which the branch or correspondent was situated. Such crediting was done by those banks in India viz. ANZ Grindlays Bank and Standard Chartered Bank, in which the Appellant Bank held its accounts. The ANZ Grindlays Bank furnished certified copies of statements of account of the Appellant Bank evidencing crediting of the amounts therein. It is also not disputed that in few of such cases credits were made in the account of the Appellant Bank instead of any account of the beneficiary client. 15. Since from both the sides, the Order dated 04.11.1997 of the erstwhile FERA Board has been emphatically argued, we feel that certain paragraphs of the Impugned Order dated 09.07.2008 need to be reproduced here: 23. Accordingly, the facts were explained to advocates for the notices on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1(2) of the Act. If it is so the Act would be applicable and the adjudication proceedings against the appellant bank would be within jurisdiction. 26. Therefore, I am of the opinion that the Girobank Plc, who is maintaining a correspondent bank account with the ANZ Grindlays Bank Ltd, Mumbai is obliged to obey the rules and regulations in India as far as foreign exchange transactions in the said account is concerned; and as such the undersigned have the jurisdiction to adjudicate the matter under the Foreign Exchange Regulation Act, 1973. 27. Further in line with the direction of the FERA Board, the Girobank Plc have already admitted the facts of the case as correct. As such I am required to decide whether these acts constitute an abetment with actions by the ANZ Grindlays Bank Ltd. in Mumbai. 28. In this connection, I find from the statement of A/c. No. 01CBB8136400 of Girobank Plc with ANZ Grindlays Bank Ltd., Mumbai that there are nineteen credits totalling to Rs. 66,42,48,246/- into this account which are the subject matter of these show cause notices. I find that the RBI vide their letter dated 28/4/1993 had forwarded to the Directorate of Enforcement, the correspondence exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /4/1993 (Documents relied upon-item No. 18 in SCN 72 and also in other SCNs), which reads as under:- Meeting with Girobank plc, U.K. (GB) in London Those Present: N.S. Butler (NSB) Head of International Division Bobert P. Edwards, Manager, International Branch, London (cards enclosed) ANZ Bank: G.P. Panda (GPP)- GM- Investment Banking Bombay D.R. F Grehan- GM- Correspondent Banking London The meeting was arranged to discuss the issue of crediting of GR's accounts by Rs. 664 M in 19 transactions on the instructions of Bank of Foreign Economic Affairs (BFFA), Moscow between April and August 1991 on behalf of Eastern Suburbs UK (ES). Prior to the meeting, we had written a letter dated 19th March, 1993 to Mr. S. Anderson, General manager, GB on the subject, requesting reversal of these entries. 1. NSB stated that GB had been apprehensive at the time of opening ES's account in April, 1991 as the transaction did not appear to be clear to them. However, they opened the account when they were given copies to 'trade' contracts by Eastern Suburbs with all necessary details. GB however reported this matter to the Bank of England and the Narcotics Squad, U.K. as they were unsur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exes to GB. 5. GPP informed GB that the RBI was examining the issue of writing to Bank of England in this matter. We requested that GB give us a detailed reply to our letter of 19.03.1993 to Mr. S.Anderson as well as other queries raised during the meeting. GPP also mentioned that the Enforcement Directorate had written to us specifically asking for names of ultimate beneficiaries from GB. GPP mentioned that the Enforcement Agencies were aware that these transactions had been negotiated between Eastern Suburbs and GB matter. NSB re-confirmed that GB had no intention to violate Indian Exchange Control Regulations and in fact were not aware of detailed rules and regulations governing credits into their Rupee Accounts at any stage. 6. GPP requested GB to consider reversing the transactions from Eastern Suburbs account as the transfers were illegal under Indian rules. GB indicated that this was not possible as they had already closed the Eastern Suburbs account in 1991. They also mentioned that Keith Fairbrother was a director of Eastern Suburbs along with his wife, and the address given in the Account Opening Form was that of his resident in UK. GB is seeking legal advice before they ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esenting the Appellants at the hearing on 22.10.2007. It was pointed out by the Ld. Adjudicating Authority that the statement of account of Girobank Plc, current account NRE-Correspondent Bank maintained by ANZ Grindlays Bank Mumbai showed credits and debits in short intervals. This showed that the noticee bank might be aware of the corresponding credits and debits into NRE account with ANZ Grindlays Mumbai. We have already noted that it is not in dispute that 19 credits were made in the account of the Appellant Bank with the ANZ Grindlays Bank and one credit was made in the account of the Appellant Bank with the Standard Chartered Bank. With such undisputed facts whereby the Appellant Bank even though being non-resident was accepting credits in its convertible accounts which allowed it to transfer such credits in foreign exchange to its client abroad, it cannot deny that it is not covered by the domestic law of FERA. Certain acts of the Appellant Bank sitting abroad triggered and facilitated responses in India which were not in accordance with the domestic law. Acceptance of any domestic law only in so far as it is beneficial, without complying to its regulatory and penal provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charged for contravention of Section 64 (2) read with Section 6 (4), Section 6 (5) and Section 49 73 (3) of FERA. Section 6 (4) and 6 (5) and 49 73 (3) of FERA require that the banks which are ADs shall not engage in any transaction involving any foreign exchange which is not in conformity with the terms of its authorization as AD and to obtain necessary declarations in this regard from the person on whose behalf it undertakes such transactions as well as shall comply with the conditions of such permission. Section 64 (2) of FERA reads as follows: (2) Whoever attempts to contravene, or abets any contravention of any of the provisions of this Act [other than section 13, clause (a) of sub-section (1) of [section 18, section 18-A], clause (a) of sub-section (1) of section 19, sub-section (2) of section 44 and sections 57 and 58] or of any rule, direction or order made thereunder, shall, for the purposes of this Act, be deemed to have contravened that provision, rule, direction or order, as the case may be. Since, abetment has not been defined under FERA, Ld. Adjudicating Authority has looked at Section 107 of the Indian Penal Code 1860 (IPC) For ease of reference Section 107 IPC is re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the person abetting was instigation and nothing else, so long as there was instigation and the offence has been committed or the offence would have been committed if the person committing the act had the same knowledge and intention as the abettor. The instigation must be with reference to the thing that was done and not to the thing that was likely to have been done by the person who is instigated. It is only if this condition is fulfilled that a person can be guilty of abetment by instigation. 54. The law does not permit the abettor to escape punishment for abetment even if the actual player who commits the offence is not criminally liable for the actual act which results in the commission of an offence (See in this regard, the situation contemplated in illustrations in Explanation III of Section 108 of the IPC). Equally, there need not be meeting of minds between all the persons involved in a conspiracy and it is sufficient if a person is engaged in the conspiracy following which the offence is committed (Explanation V to Section 108 of the IPC). This means that it is not even necessary that the persons who are engaged in the conspiracy, to even know the identity, leave alone ph ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to the charge against a particular offence. Sub-Section 3 of that Section makes such presumption applicable to proceeding before an Adjudicating Officer. The circumstances and the evidence in the present case reverse the burden on to the Appellant which it has failed to discharge. Therefore, the charge of the abetment against the Appellant Bank stands established as it contravened Section 64 (2) read with Section 6 (4), Section 6 (5) and Section 49 and Section 73 (3) of FERA, with respect to Appeals Nos. FPA-FE-192/MUM/2008 and FPA-FE-07/MUM/2013. 21. It is a matter of record that Mr. John Baden was the Chief Executive Officer (CEO) of the Appellant Bank during the relevant period. He was responsible to the Appellant Bank for the conduct of its business. Ld. Adjudicating Authority has observed in the Impugned Order dated 09.07.2008 that no evidence was placed before him that the contraventions by the Appellant Bank had taken place without the knowledge of the CEO or that he exercised all due diligence to prevent such contravention. Mr. John Baden, then CEO of the Appellant Bank paid penalty of Rs. 500 imposed on him in the Impugned Order dated 11.02.2010 and has not filed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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