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TMI Blog2024 (12) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... . In this case the Bank itself was holding such license/permission and would be deemed to have contravened the provision. No merit in the contention of the learned counsel for the appellant that at best the appellant Bank could have been held liable for abetment . As a result of the deeming provision of Section 49, the appellant Bank had clearly contravened the provisions of FERA, 1999 and rendered itself liable for imposition of penalty. That having been said, I also find certain mitigating factors in favour of the Bank. deliberate mala fides have also not been alleged in the present case against the Bank. There is little doubt that the orders of both the authorities below are in the nature of ex parte order. No proof has been placed on record by the respondents that the call notices referred to in the impugned order were duly served on the appellant and were wantonly ignored. As regards the KYC norms, considering the period of time the matter relates to, namely, the early 1990s, it would not be wrong to say that the awareness regarding the same at that time was considerably less than what it is today, the requirements were much less stringent and the enforcement thereof even less ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the above facts, it appeared that Shri Bhadresh B. Gohil, Sh. P.S. Sabharwal and Sh. Laxman Singh had abetted the contravention committed of the provisions of section 9(1)(e) along with 64 to of FERA, 1973. It also appeared that the company, M/s Mapleleaf Trading Company Limited, a person resident outside India and the present appellant, Allahabad Bank (now Indian Bank), had contravened the provisions of section 9(1)(e) of FERA, 1973 and rendered themselves liable to be proceeded against under section 50 of the said Act. 4. A Show Cause Notice (SCN) dated 18.05.2002 was accordingly issued to the appellant and others by the adjudicating authority, i.e., the Deputy Director, Directorate of Enforcement, requiring them to show cause why adjudication proceedings as contemplated under section 51 of FERA, 1973 should not be initiated against them for the contravention of the provisions of Section 9(1)(e) and 64 to of the said Act. 5. The proceedings so initiated culminated in the order in original dated 03.02.2016 whereby the learned adjudicating authority, upon appreciation of the material before him, held that the appellant along and other noticees are liable to be penalized for co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gned order was passed by the appellate authority. 10. On merits, it is contended by the appellant that they did not place any sum to the credit of the non-resident company, i.e., M/s Maple Leaf Co. Ltd. The amount was placed by the account opener and not by the Bank. It is argued that the charge of contravention of Section 9(1)(e) cannot stand as against the Bank. Section 9(1)(e) of is not attracted in the case as the ingredients of the said provision were not present and if at all the appellant Bank was to be held responsible for any contravention, it should have been under section 49 read with 9(1)(e) of FERA, 1973. At best the charge of abetment could have been made against the Bank. It is reiterated that the appellant bank did not place any amount at the credit of the Non-Resident company in question. 11. He also referred to the legislative intent in enacting FERA, 1973 which was intended to prevent hawala transactions. It is also stressed that regulatory authority for the bank is the RBI, and the Bank duly informed the RBI as soon as it became aware of the matter. A copy of the letter was also addressed to the respondent (ED). The RBI did not take any adverse notice of the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of M/s Mapleleaf Trading Company Ltd., but also did not care much in operation of the same in as much as the account was introduced by the person who had vested interest in the operation of the account as the account was opened for the sake of transferring rent to Sh. P.S. Sabharwal, the introducer. The negligent attitude of Allahabad Bank continued even after the issue of SCN as the bank never bothered to reply to any of the notices issued by the Enforcement Directorate on various dates starting from 09.08.2006, 08.09.2006, 18.05.2007, 29.10.2007, 05.12.2007, 29.05.2009, 30.06.2009, 22.08.2013, 06.12.2013, 03.03.2014, 16.01.2015 14.12.2015. The ld. Dy. Director has noted with surprise that the bank has taken absolutely no heed to almost 12 (twelve) notices issued by the Directorate and that the bank had shown a callous attitude which is outrageous and is beyond tolerance, and the Allahabad Bank, as a nationalized bank was not expected to show this kind of attitude when an SCN charging the bank for violation of an economic law involving a large sum of Rs. 1,46,98,710/- is issued. 15. The Ld. Counsel for the respondent accordingly argued that the imposition of penalty in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... marily aimed against a third party who has placed any sum to the credit of any person resident outside India. No judicial precedent dwelling on the said provision has been cited from either side. It is found, however, that the Hon ble Madras High Court, in Saratha's Vs. Assistant Director, Enforcement Directorate MANU/TN/0726/1995, wherein a firm by the name, Saratha's situated in Trichy, and its managing partner one Manavalan, had placed a sum of Rs. 17,645 to the credit of one V. Subramanian of Ceylon (a person resident outside India), and it was argued on behalf of the appellant that there was no material to point out that the appellant-firm had any knowledge as to the said V. Subramaniam being a citizen of Ceylon and a resident outside India and it was further contended that the appellant-firm was under a bona fide belief that he was a resident of India, the Hon ble High Court held that a cursory perusal of the provision reveals that no person in, or resident of India, shall place any sum to the credit of any person, resident outside India, except in accordance with any general or special exemption, which may be granted conditionally or unconditionally by the Reserve Ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant Bank could have been held liable for abetment . As a result of the deeming provision of Section 49, the appellant Bank had clearly contravened the provisions of FERA, 1999 and rendered itself liable for imposition of penalty. That having been said, I also find certain mitigating factors in favour of the Bank. As submitted by the Ld. Counsel for the appellant, it appears that the appellant Bank itself had brought the matter to the notice of the RBI and also the ED when the matter came to its attention through the Income Tax Department. I also find that deliberate mala fides have also not been alleged in the present case against the Bank. There is little doubt that the orders of both the authorities below are in the nature of ex parte order. No proof has been placed on record by the respondents that the call notices referred to in the impugned order were duly served on the appellant and were wantonly ignored. As regards the KYC norms, considering the period of time the matter relates to, namely, the early 1990s, it would not be wrong to say that the awareness regarding the same at that time was considerably less than what it is today, the requirements were much less stringent a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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