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TMI Blog2023 (7) TMI 1478X X X X Extracts X X X X X X X X Extracts X X X X ..... of a civil obligation which would attract penalty irrespective of the fact whether the contravention was made with any guilty intention or not. The Judgment supra cited a number of previous judgments wherein it was held that mens rea is not an essential element for imposing penalty for breach of civil obligations. The appellants have brought back the entire amount of Foreign Exchange worth Rs. 6,14,56,000/- and have paid Rs. 3,05,53,769/- towards Income-tax and Interests, thus inclined to restrict and reduce the penalty amount to the pre-deposits of the penalties already made by the two Appellants. While it is true that the Foreign Exchange of Rs. 6,14,56,000/- earned and retained abroad has been admittedly been divided between the Appellant No. 1 and the Appellant No. 2 in the ratio of 30 is to 70, I have restricted and reduced the penalties from Rs. 1.5 crore to Rs. 37.5 lakhs for Appellant No. 1 and from Rs. 3.5 crores to Rs. 35 lakhs for Appellant No. 2. This is justified on the grounds that after the initial deposit in Deutsche Bank in Geneva in the names of the two appellants, subsequently the amount was transferred to account in HSBC Bank in Geneva which was in the name of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent in India) Regulations, 2000. 3. The impugned Adjudication Order dated 13-4-2018 held the charges as established against the appellants and imposed penalty of Rs. 1.5 crores on Shri Kumar Satur Nathani (Appellant No. 1) and Rs. 3.5 crores on Shri Roop Kishanchand Khemani (Appellant No. 2). The Ld. Adjudicating Authority held that the two appellants have admitted in their statements under section 37 FEMA that they had opened joint Bank Account in Deutsche Bank in Geneva. Money from that account was transferred to HSBC Bank Account in Geneva which was in the name of the Appellant No. 1 and his wife and it was further transferred to HSBC Bank Account in Dubai which was in the name of the cousin of the Appellant No. 1. The explanation for the funds in the said accounts was earning from consultancy services for Textile Factories in Nigeria from 1995 to 2003. He held that FEMA Show Cause Notice was based on the statements recorded under FEMA. The Appellants had admitted that they held the Bank Accounts in Geneva without the approval of RBI. The Ld. Adjudicating Authority also held that the generation of the money from consultancy charges could not be proved by the Appellants in the ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, pleaded on 4-7-2023 5-7-2023 to set aside the impugned Adjudication Order. 6. Learned counsel for the respondent argued on 4-7-2023 5-7-2023 that the appellants had deposited the Foreign Exchange abroad without taking permission of RBI and since they had failed to remit the Foreign Exchange till 2019, the offence stood completed. He reiterated paragraphs 5.6 and 5.7 of the impugned Adjudication Order and therefore, attributed deliberate intention in opening the Bank Accounts abroad and in retention of such funds abroad. He pleaded that in any case there are judicial pronouncements which do not require mens rea for imposition of penalty under FEMA. He therefore, pleaded that the contraventions under FEMA are established and hence the appeals may not be allowed. 7. I have duly considered the rival submissions made by the appellants and the respondent as well as the appeal, the reply, the written submissions filed. As evidenced by the Complaint dated 30-10-2017 filed under FEMA it is to be noted that the Prosecution Complaint filed under the Income-tax Act in the Court of law has been relied upon by the Respondent and not on any direct communication of information from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing residents in India acquired, held, owned and transferred Foreign Exchange outside India. They did not have any permission from RBI to do so. In fact, they also did not inform their Authorised Dealer/RBI of having any such funds and of having opened Bank Accounts abroad relating thereto. They have also not mentioned of having made any efforts about repatriation of such Foreign Exchange at least till 2015, and could only repatriate such amount in 2019. 9. In the decision dated 23-5-2006 of the Hon'ble Supreme Court in Civil Appeal Nos. 9523-9524 of 2003 in the case of The Chairman, SEBI v. Shriram Mutual Fund [2006] 68 SCL 216. His Lordships stated in para 20 of the judgment: In our considered opinion, penalty is attracted as soon as the contravention of the statutory obligation as contemplated by the Act and the Regulation is established and hence the intention of the parties committing such violation becomes wholly irrelevant. A breach of civil obligation which attracts penalty in the nature of fine under the provisions of the Act and the Regulations would immediately attract the levy of penalty irrespective of the fact whether contravention must be made by the defaulter w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is true that the Foreign Exchange of Rs. 6,14,56,000/- earned and retained abroad has been admittedly been divided between the Appellant No. 1 and the Appellant No. 2 in the ratio of 30 is to 70, I have restricted and reduced the penalties from Rs. 1.5 crore to Rs. 37.5 lakhs for Appellant No. 1 and from Rs. 3.5 crores to Rs. 35 lakhs for Appellant No. 2. This is justified on the grounds that after the initial deposit in Deutsche Bank in Geneva in the names of the two appellants, subsequently the amount was transferred to account in HSBC Bank in Geneva which was in the name of the Appellant No. 1 and his wife. Further the said amount was transferred to an account in HSBC Bank in Dubai in the name of the cousin of the Appellant No. 1. It is also on record that in 2019 the entire amount of remittance from abroad took place into the account of the Appellant No. 1 in the Central Bank of India Mumbai. I therefore, find that the Appellant No.1 has been more active in the transfer of the said amount between the accounts abroad. Hence, the pre-deposits of the penalties of the respective amounts of Rs. 37.5 lakhs made by the Appellant No. 1 Shri Kumar Satur Nathani and Rs. 35 lakhs made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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