9911796707
TMI Blog2008 (8) TMI 1032X X X X Extracts X X X X X X X X Extracts X X X X ..... ority of India, thus violated, the conditions prescribed under Para 10C 21 Exchange Control Manual of RBI of taking delivery. While disposing off the application for dispensation of pre-deposit, this Tribunal allowed the appellants to make pre-deposit of 50% penalty-by order dated 9.1.06. The appellants have complied with the pre-deposit order. Presently these appeals are taken up for final disposal on merits. 3. We have heard Shri L.S. Shetty. Advocate for the appellants and Shri A.C. Singh, DLA, for Directorate of Enforcement. Both of them have filed their respective written submissions which are taken on records. 4. We have heard lengthy arguments from Shri L.S. Shetty, Advocate, on behalf of the appellants and Shri A.C. Singh, DLA, on behalf of the Enforcement Directorate. According to learned counsel, shares of Steel Authority of India were purchased through a broker after due permission from RBI but delivery of shares was not given by the broker. In this situation the appellants sold back these shares through the same broker. In this regard he brought to our attention a letter dated 22.5.06 from the appellants where position of purchase of the shares is clearly described as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rden of producing permission of RBI squarely lies on the appellants but they have failed to discharge the same as per Section 71(1) FER Act. 8. The para 10C.2 1 of Exchange Control Manual prescribes general conditions for purchase of shares with repatriation or non-repatriation rights. Under these general conditions para 10C.21(c)( v) has prescribed in a clear manner that overseas person must take delivery of the shares if purchased. Though period of time is not prescribed in this paragraph but when a legal duty is created this Tribunal can look to the reasonable time within which the duty must be performed. This is an admitted position that broker did not make delivery of the purchased shares to the appellant company who is registered in Mauritius . Thus a non-resident person when failed to take delivery of shares (either not made by broker or not taken appellant company) then violation of the genera! condition prescribed under para 10C.21(c)(v) is clearly made out. 9. According to learned counsel, the ECM does not contain statutory directions as per the judgment in LIC of India v. Escorts Ltd. AIR 1996 SC 1370. Here learned counsel is reading too much from the judgment in LIC o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onditions of purchase of shares clearly states that overseas person must take delivery of the shares so purchased. 13. Even if it is accepted for the sake of argument that conditions of taking delivery of shares is not prescribed in the permission of RBI given to the appellants this condition being a general condition in the nature of supplementary provision becomes automatically applicable to the present appeals. It is not possible to accept that without taking delivery of the shares the overseas company can purchase shares of an Indian company violating the general conditions prescribed for this purpose. The prescription of these general conditions cannot be termed in violation of the statutory provisions or contrary thereto but these are supplementary in nature. 14. The golden rule of interpreting a statute is to ascertain the intention of the legislature and such intention is primarily to be gathered from the language used which means that attention should be paid to what has been stated and also to what has not bean stated. As a consequence any construction which requires addition or substitution of words or rejection of words as meaningless has to be avoided. Rules of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lty to this Tribunal. 17. It is well recognized that undue sympathy to impose inadequate amount of penalty will do more harm to the system of justice and undermine not only public confidence in the efficacy of law but will also undermine economic well-being of the country. The formula of sentencing while arriving at quantum of penalty must bear correlation during the period not only when the contravention is committed but also with the prevalent period when sentencing is imposed. As is well-known, inflation has adversely affected the real value of money. If that is so, the quantum of penalty is also required to be high otherwise law will fail to regulate social interest, and more so in stamping out of contravention causing economic loss to the nation. The quantum of penalty must create deterrence otherwise regulatory offences will lose their real meaning. With regard to formula of sentencing, the Supreme Court in State of Karnataka v. Raju JT 2007 (11) 397 Para 13 observed as follows:- "The criminal law adheres in general to the principle of proportionality in prescribing liability according to the culpability of each kind of criminal conduct. It ordinarily allows some sign ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst the impugned order but has pleaded in the written submissions that penalty against the two appellants is required to be increased. Despite absence of revision or appeal by Enforcement Directorate, this Tribunal has ample powers to suo motto examine legality, propriety and correctness of any adjudication order under Section 52(4) foreign Exchange Regulation Act, 1973, to avoid perpetuation of injustice. We feel that this is an appropriate case where this power is required to be exercised failing which an injustice will occur to the public interest whose protection lies on the shoulders of every citizen. 21. Here, we are reminded of the observation of Hon'ble Supreme Court in The Chairman, SEBI v. Sriram Mutual Fund & Anr. JT 2006 (11) SC 164 where Apex Court has observed as follows:- "In our view, the impugned judgment of the Securities Appellate Tribunal has set a serious wrong precedent and the powers of the SEBI to impose penalty under Chapter VIA are severely curtailed against the plain language of the statute which mandatorily imposes penalty on the contravention of the Act/Regulations without any requirement of the contravention having been deliberated our c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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