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TMI Blog1999 (3) TMI 680X X X X Extracts X X X X X X X X Extracts X X X X ..... ry 'Scam'. The earlier part of the order was modified by the Supreme Court to the extent that the CBI was directed to investigate cases already instituted by the State Police. Both the CBI and Income Tax Department have been making investigation and inquiry and submitting status reports from time to time. Later in view of certain facts coming on the record suggesting prima facie violation of the provisions of the Foreign Exchange Regulation Act, 1973(FERA) the Enforcement Directorate was also directed to make investigation into the concerned cases. 2. On November 6, 1998, on behalf of the Enforcement Directorate Mr. D. Roy Chaudhary took the stand that on account of judgment of the Foreign Exchange Regulation Appellate Board (FERA Board) in a batch of cases decided on June 30, 1997 the Directorate has some difficulties in making the inquiry in cases of 'remittances' made by Non-Resident Indians (NRIs) during the period when the Immunity Scheme under the provisions of the Remittances of Foreign Exchange and Investment in Foreign Exchange Bonds (Immunities and Exemptions) Act, 1991 (in short the 'Immunities Act') was in vogue. According to the counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to or exchange with, any person not being an authorised dealer, any Foreign Exchange, nor he shall enter into any transaction which provides for the conversion of Indian currency at rates of exchange other than the rates for the time being authorised by the Reserve Bank. Where any foreign exchange is required by any person, other than an authorised dealer or a money changer, for any particular purpose, or where any person has been permitted conditionally to acquire foreign exchange, the said person shall not use the foreign exchange so acquired otherwise than for that purpose or fail to comply with any condition subject to which permission is granted. Section 9 of the said Act puts similar restriction on payment. This lays down that save as provided in the general or special exemption, no person in, or resident in, India shall (a) make any payment or for the credit of any person resident outside India, (b) receive, otherwise than through an authorised dealer, and payment by order or on behalf of any person resident outside India. It is not necessary to refer to the various provisions with their clauses and sub-clauses, for the purposes of this case. Having indicated the nature of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the Foreign Exchange Regulation Act, 1973 shall have the meanings respectively assigned to them in that Act. 3. Immunities-(1) Notwithstanding anything contained in any other law for the time being in force- (a) no recipient, who claims immunity under this Chapter in accordance with such scheme as the Reserve Bank of India may, by notification in the Official Gazette, specify for the purposes of receiving remittances under this Chapter, shall be required to disclose, for any purpose whatsoever the nature and source of the remittance made to him; (b) no inquiry or investigation shall be commenced against the recipient under any such law on the ground that he has received such remittance; (c) the fact that the recipient has received a remittance shall not be taken into account and shall be inadmissible as evidence in any proceedings relating to any offence or the imposition of any penalty under any such law. (2) Nothing in Sub-section (1) shall apply- (a) to any foreign exchange which is required to be brought into India under any of the provisions of- (i) the Foreign Exchange Regulation Act, 1973, or (ii) the Income-tax Act, 1961, read with the Foreign Exchange Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney has travelled abroad. It would not be strange if the money has again found its way back into India in the shape of foreign exchange. Where any Indian rupee is converted in foreign exchange by a Nonresident Indian (NRI) by one or other means and for consideration, and then remitted to a person resident in India, it cannot be said to be 'remittance' of foreign exchange within the meaning of Section 2(b). Unless investigation is made as to whether the remittance was by a Non-resident Indian or through a Non-resident Indian the truth may never come out. 8. As stated above, Section 3 provides immunity to the recipients of remittance falling under Section 2(b). In a case falling under Section 2(b), no inquiry or investigation can be made against him but where the inquiry or investigation is proposed to be made on the point as to whether the amount received by him (recipient) is in fact 'remittance' within the meaning of Section 2(b), I do not think Section 3 would stand as a bar. Any such interpretation would make the provisions of Sections 8 and 9 of the Foreign Exchange Regulation Act redundant. As noticed above, Sections 8 and 9 put certain restrictions on dealing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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