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TMI Blog2008 (10) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... te penalties on other co-noticees who are not parties in any of these appeals. (2) Appeal No. 531/05 against Adjudication Order No. Adj/142/DZ/ 2004/AD(SMB), dated 28-2-2005 passed by Assistant Director, Enforcement Directorate imposing penalty of Rs. 2 lakhs on the appellant bank for contravention of section 8(1) read with section 64(2) and also sections 6(4), 6(5) and 73(3) of FER Act, 1973 besides separate penalty on Co-noticee Anand Prakash Tripathi. 3. By an order dated 28-10-2005, the appellant Bank in appeal No. 531/05 was directed to furnish bank guarantee of 50 per cent of the penalty amount. Dispensation applications in Appeal Nos. 228 and 230/06 were heard on 5-2-2007 when the individual appellant and appellant-bank were directed to deposit the entire penalty amount in their respective appeal as pre-deposit. However, the Hon'ble High Court of Delhi on appeal filed by the individual appellant, by an order dated 4-3-2008 directed this Tribunal to proceed with the hearing of his appeal by accepting the pre-deposit of Rs. 5 lakhs deposited by the said appellant as sufficient for the present. It is stated that the appellant bank has complied with the pre-deposit order pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of the Hon'ble Supreme Court in Manipur Administration v. Thokshom Bira Singh AIR 1965 SC 87 ld. Advocate contended that the present proceedings is barred on account of the doctrine of Issue Estoppel as the respondent has accepted the earlier order dated 29-3-2004 passed by the Adjudicating Officer exonerating the appellant-Bank against similar and identical charges. Appeal No. 228/06 8. Shri A.C. Singh, DLA supporting the impugned order dated 4-4-2006 contended that the individual appellant Shekhar Goel admitted that while acting as a mandatee of Deepak Bahari of Spain deposited huge foreign exchange in two NRE accounts maintained by said Bahari with American Express Bank and Standard Chartered Bank in 1993. The said individual, appellant further admitted that he personally made in September/October 1993, 22 deposits in the said NRE Account with American Express Bank as the said Deepak Bahari was not in India. It is further admitted that the said appellant being a Power of Attorney Holder also made 15 deposits of foreign exchange in NRE account of the said Deepak Bahari with Standard Chartered Bank on various dates in March 1993. He then contended that in such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .The provisions of rule (3) and sub-rules (4), (5), (6) and (7) are code by themselves and they set out the complete procedure for holding and an enquiry under section 51. Therefore, the enquiry under section 51, which as already stated is criminal in nature, could be stated to have commenced only with the issue of notice under sub-rule (3) of rule 3. If that was not the case, there was absolutely no reason why sub-rule (3) should provide for a second notice and why sub-rule (4) should provide that the Adjudicating Officer should explain to the person concerned the offence committed by the person indicating the provisions of the Act or of the Rules and give an opportunity to such person to produce oral and documentary evidence as he may consider relevant to the enquiry and upon consideration of the evidence produced come to conclusion whether the person has committed the contravention or not. Section 51 also specifically provides that the Adjudicating Officer shall hold an enquiry in the prescribed manner after giving the person a reasonable opportunity of making a representation in the matter and that enquiry was for the purpose of adjudicating under section 50 whether such a per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not mean the best, it means most suitable in a given set of circumstances. (iii) There is no point on which a greater amount of decision is to be found in Court of law and equity than as to what is reasonable. It is impossible a prior; to state what is reasonable 'as such in all cases. You must have the particular acts of each case' established before you can ascertain what is meant by reasonable under the circumstances - Lord Romilly M.R. Labouchere v. Dawson [1892] LR 13 Eq. CA 325. In this regard reference may also be made to the decision, of the Hon'ble Supreme Court in Veerayae Ammal v. Seeni Ammal AIR 2001 SC 2920 where the Hon'ble Court observed as under: 13. The word 'reasonable' has in law prima facie meaning of reasonable in regard to those circumstances of which the person concerned is called upon to act reasonably knows or ought to know as to what was reason- able. It may be unreasonable to give exact definition of the word 'reasonable'.... (p. 2923) 14. Though some delay is not ruled out in issuance of show-cause notices but that alone will not help the appellant as much as that individual official's negligence cannot be given the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1993 UK Pound 7620 8. 23-9-1993 US $ 4955 9. 23-9-1993 UK Pound 1265 10. 4-10-1993 US $ 8950 11. 6-10-1993 Aus $ 2300 12. 8-9-1993 US $7019 13. 8-9-1993 UK Pound 290 14. 8-9-1993 Canadians $ 100 15. 8-9-1993 Hong Kong $ 50 16. 8-9-1993 Aus $ 50 17. 8-9-1993 Fr. Frank 900 18. 8-9-1993 Swiss Frank 200 19. 16-9-1993 US $ 1448 20. 16-9-1993 UK Pound 2060 21. 21-9-1993 US $ 6560 22. 21-9-1993 UK Pound 1120 19. From the above chart of deposits in NRE account of Deepak Bahari of Spain it is quite clear that first four deposits were made on 6-10-1993, thereafter another three deposits were made on 11-10-1993. There is one more deposit item wise on Sl. No. 11 it is again made on 6-10-1993. The deposits at Sl. Nos. 8 and 9 are on 23-9-1993 and the deposit at Item No. 10 is on 4-10-1993. Amongst the remaining deposits from Item Nos. 14-18 were made on 8-9-1993 which date is also described against Item Nos. 12 and 13. Thus on the same date of 8-9-1993 seven deposits were made. The remaining last two items i.e., 21 and 22 were made on 21-9-1993 and Item Nos. 19 and 20 were made on 16-9-1993. From the above description it is amply clear that all these dates of different deposits in NRE account o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RE account holder is not mandatory as per the extant provision of ECM is misplaced. It is evident from the guidelines laid down in Para 29B8(c) of ECM, 1987 requires that authorized dealer is to be satisfied that account holder is still normally resident outside India and foreign currency Bank notes tendered during his temporary visit to India. Admittedly, the appellant Bank did not bother to ensure the compliance of this requirement when huge foreign currencies were deposited in NRE account in short intervals in 1993. 24. The Foreign Exchange Regulation Act, 1973, has created regulatory mechanism and the contravention thereof can be nicknamed as a regulatory offence. As the statute deals with regulatory offences, so construction of the enactment of the Parliament must be purposive construction i.e., according to its purpose, so far as wording may reasonably permit. The resolution of ambiguity, if any shall be in favour of implementing the statutory object of protecting Indian economy, which otherwise, can be termed as protecting public interest. The purposive construction is well recognized by Lord Griffths in Pepper v. Hart [1993] A.C. 593 at 617 as follows: The days have long pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... especially when this section starts with the words without prejudice to the provisions of sections 50 and 51 whereby the provisions of sections 50 and 51 are excluded from a possible hit. The term without prejudice has been defined in Black's Law Dictionary as follows: Where an offer or admission is made 'without prejudice', or a motion is defined or a bill in equity dismissed 'without prejudice', it is meant as a declaration that no rights or privileges of the party concerned are to be considered as thereby waived or lost, except insofar as may be expressly conceded or decided . In Wharton's Law Lexicon the author while interpreting the term 'without prejudice' observed as follows: The words import as understanding that if the negotiation fails, noting that has passed shall be taken advantage of thereafter; so, if a defendant offers, 'without prejudice', to pay half the claim, the plaintiff must not only rely on the offer as an admission of having a right to some payment. The rule is that nothing written or said 'without prejudice' can be considered at the trial without the consent of both parties - not even by a judge in determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India and other mandatory conditions stated in the extant provisions of ECM. This omission shows direct nexus between the assistance given by the appellant-Bank and the contravention of the FER Act 1973 which come within the purview of the charge of abetment. It is established that the contravention has been committed in consequence of abetment where the appellant-Bank virtually acted inactive complicity in allowing deposits of huge foreign exchange bank notes in NRE account of Deepak Bahari of Spain without bothering to ascertain the factual aspects as mentioned in the guidelines issued by RBI. 31. As regards individual appellant the argument that he has no motive or intention and acted as mere agent is not relevant. The mens rea need not be proved by Enforcement Directorate as has been held in State of Maharashtra v. Mayor Hans George AIR 1965 SC 722. Further section 59(1) provides existence of mens rea is required to be presumed except where the opposite party proves total non-existence of mental state. Thus burden has been casted upon and not on prosecuting party. 32. From the above discussion, it becomes clear that two Adjudication Orders stated above, so far as holding the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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