TMI Blog2001 (4) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 51 of FERA, 1973 issued by the competent authority being dissatisfied with the reply of said Memorandum. 2. Rule issued and interim order of injunction in terms of the prayer (f) was passed ex parte on 10th August, 1984 by A.K. Sengupta, J. till 15th September, 1984 upon granting leave to the respondents to apply for variation, vacating the interim order. However, after expiry of such interim order, by the order dated 18th September, 1984, A.K. Sengupta, J. allowed the interim order as earlier passed to continue until further orders. In view of such, the entire proceeding has been kept pending. The Affidavit-in-Opposition has been filed by respondent No. 3, Reserve Bank of India, but no Affidavit-in-Opposition has been filed by respondent Nos. 1 and 2 namely Union of India and the Special Director of Enforcement under FERA Act. Affidavit-in-reply has been filed by the writ petitioners. 3. The facts of the writ petition are to this effect. The writ petitioner bank is running the business of banking all over the world having its Head Office at London. There are different branches in different countries including the one here in India. On account of Head Office expenses at L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 966 and 30th March, 1966 in respect of assessment years 1960-61 and 1965-66. The Income-tax Officer disallowed a portion of amounts claimed as deductable expenses on account of proportionate Head Office expenses allocated to India on the same principle. On appeal, however, such amount was reduced in respect of each year concerned by the Appellate Authority. The Income-tax Officer gave effect of the orders passed by the Appellate Authority v.g. Assistant Commissioner of Income-tax, as arose relating to the re-assessment years l949-50 to 1959-60 and the assessment relating to the assessment years 1960-61 to 1965-66, by his order dated 10th May, 1967 and 6th July, 1967 respectively. 7. In pursuance of such revised orders, the sum of Rs. 9 lakhs 82 thousand 342 relating to assessment years 1940-50 to 1959-60 and a sum of Rs. 5 lakhs 20 thousand 07 relating to assessment years 1960-61 to 1965-66 being total Rs. 15 lakhs 2 thousand 351 was disallowed. It is a portion of Head Office expenses as was earlier allowed not only by the Income-tax Authorities following the formula as was prevalent earlier but which had the permission of Reserve Bank of India relating to remittance of the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding would not be initiated, the present writ application has been filed. It is submitted by the learned Advocate of the petitioners that in view of the special facts of the case, there was no violation of Section 10(1)(a) of FERA, 1947 and accordingly the impugned Memorandum is of without jurisdiction. Further, it is contended that before coming to a decision as to why adjudicating proceeding would not be commenced, a decision by the Authority exercising quasi judicial function, there ought to have been subjective satisfaction on the points as taken in the reply of impugned memorandum on 11th June, 1981. But in the instant case, no such satisfaction was reached but a show cause notice has been issued, which is in violation of principle of natural justice. It is further contended that once permission granted by the Reserve Bank of India upon proper clearance of Income-tax Authorities relating to remittance of expenditure on account of the Head Office expenses in pursuance of a decision as was acceptable by the concerned respondents, for change of such formula by a subsequent decision in the year 1976 by re-assessment of the Income-tax, it cannot saddle the writ petitioners to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed. Furthermore, this Court is not unmindful of the other provisions of FERA, 1947 now on repeal, FERA, 1973 whereby and wherein there is an Appellate Board under Section 52 of FERA, 1973 and the order passed by the Adjudicating Officer under Section 51 of said Act is appealable. Normally, it is settled by different legal proposition that Writ Court would not interfere when the matter is pre-matured and will not stop any adjudicating proceeding or statutory enquiry, which is at the investigation stage. But in the instant case there is a basic legal infirmity as to be revealed from interpretation of Section 10 itself of FERA, 1947 now Section 16 of FERA, 1973, which would justify the writ as maintainable. The entire lis now on the pivotal ring of interpretation of Section 10 of FERA, 1947 qua the right of initiation of adjudicating proceeding under Section 23 of FERA, 1947 now renumbered with some change as Section 51 of FERA, 1973. For appreciation relevant sections are quoted. Section 10 of FERA, 1947 reads as follows :- Duty of persons entitled to receive foreign exchange. - (1) No persons who has a right to receive any foreign exchange or to receive from a person residen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged to have been incurred by the London Head Office of the said Bank which was shown wrongly to be attributable to the functioning to the said Bank in India during the relevant period. AND WHEREAS it appears that the Indian branch of the said Bank did or refrained from doing anything, or took or refrained from taking any action which had the effect of securing that the repatriation of Rs. 9,82,342/- was delayed for a period of 7 years 8 months 10 days and repatriation of Rs. 5,20,009/- was delayed for a period of 7 years 6 months 14 days without the general or special permission of the Reserve Bank of India; AND WHEREAS it appears that by delaying the repatriation of a sum totaling to Rs. 15,20,351/- the Indian Branch of the said Bank contravened the provisions of Section 10(1)(a) of Foreign Exchange Regulation Act, 1947 and thereby rendered itself liable to be proceeded against under Section 23(1)(a) of the said Act. 16. The Adjudicating Authority under the Act was not satisfied with the show cause as shown wherein a categorical case was made out that as per direction of Reserve Bank of India, said amount was repatriated, irrespective of the ground that there was no re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(2) of said Act by the Reserve Bank of India. In the instant case, the Reserve Bank of India has dealt with the matter by its communication dated 28th December, 1974 appearing at Annexure G page 79 of the writ application and whereby as per advice, the present writ petitioner repatriated the amount. Hence, the cause of action of such non-repatriation starts from date of receipt of such letter as issued by the Reserve Bank of India upon exercise of the power under Section 10(2) of FERA, 1947. In the event of any violation of the direction of Reserve Bank of India under Section 10(2) of said Act, then only a penal provision under Section 23 of said Act would be attracted. This point is clear from the interpretation of the statute itself. 21. In Section 23 of said Act, a clear provision has been made that for any violation of provision made in Section 10 of the Act, the penal consequence will follow. Since the Section 10 of said Act comprising of Section 10(1) as well as 10(2), Section 10(1)(a) cannot be taken out separately without looking into provision of Section 10(2) of the Act itself, as the same would result two situations and/or contingency as are contrary to each other. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 10(l)(a) and Section 10(2) of the said Act would lead to penalty procedures under Section 23 of the said Act. In the instant case, whatever, the delay caused by the writ petitioners, the same was adjudicated upon and decided by the Reserve Bank of India under Section 10(2) of said Act. It is also a statutory provision empowering the Reserve Bank of India to pass necessary direction for securing the receipt of Foreign Exchange. Hence, the delay of 7 years and more as is the only ground in the impugned memorandum upon taking into account, the date of the order of re-assessment by the Income-tax Authority in the year 1967 as the date of cause of action, is not at all a relevant factor for initiation of any adjudicating proceeding. Since the delay simpliciter under Section 10(1)(a) of said Act cannot attract penal provision of Section 23(1)(a) of the said Act till a decision under 10(2) of said Act is reached directing to take steps namely to repatriate the money or do any other things, cause of action to attract Section 23(1)(a) of the Act would be after the direction was passed under Section 10(2) of the said Act. 22. Furthermore, the proceeding under the FERA Act before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Reserve Bank of India. The very purpose of Section 10 of said Act and adjudication for violation of said provision by imposing penalty under Section 23 of FERA, 1947 a penal consequence to protect the Foreign Exchange. Since there is a penal consequence, the law to be construed strictly applying the test of criminal jurisprudence. It is clear from the phraseology of the statute that for violation of Section 10 of said Act in one hand, penalty can be imposed and in other hand, criminal liability can be fixed, hence, entire statute to be looked into in that angle. 24. Hence, once the Reserve Bank of India has dealt with the matter under Section 10(2) of the said Act directing the petitioner to repatriate the money on appreciating the entire issue namely that there was no fault on the part of the writ petitioners while remitted amount to the Head Office expenses upon permission of the Reserve Bank of India, cause of action of violation of such would arise upon cumulative effect of both the two sections from the date when such letter was received by the writ petitioner Bank. The writ petitioner on receipt of such letter by his communication dated 3rd January, 1974 appearing at Ann ..... X X X X Extracts X X X X X X X X Extracts X X X X
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