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FEMA - Case Laws
Showing 41 to 51 of 51 Records
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2015 (2) TMI 217 - GUJARAT HIGH COURT
Waiver of pre deposit - Appeal dismissed for want of satisfying the predeposit requirement - Held that:- though as per subsection( 1) of section 15, an appeal against an order of penalty or redemption charges should ordinarily be accompanied by payment of such amounts, it is within the power of the appellate authority to waive fully or in part such requirement either unconditionally or subject to conditions if it is found that such deposit would cause undue hardship to the appellant. - Under the circumstances, when the petitioner had made such an application making specific request for waiver of predeposit requirement, the appeal could not have been dismissed on the ground that the appellant did not fulfill such predeposit requirement. It was expected in law of the appellate authority to first decide such an application even if the application was rejected by the appellate authority refusing to waive predeposit requirement or same was waived on some condition, the appellate authority had to give reasonable time to the appellant to either make full predeposit or to fulfill the condition that may have been imposed in such order. In any case, dismissal of the appeal for want of predeposit without disposing of the petitioner’s application for waiver thereof was simply not permissible. - Impugned order stands quashed - Decided in favour of appellants.
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2015 (2) TMI 174 - DELHI HIGH COURT
Violations of Sections 9 (1) (a), 19 (1) (d) as well as 29 (1) (b) read with Section 68 FERA - Held that:- although the AO was passed on 15th October 1990, the order passed by the AT staying recovery of the penalty amount was not passed till 26th May 1995. Then again admittedly the stay order was not formally communicated to the parties. Although the ED appears to have not taken steps to recover the penalties during this entire period, it woke up on 27th December 1999 i.e. more than 9 years after the AO sanctioned the recovery of the penalty amount. At this time, the Petitioners were under a bona fide belief that the recovery of penalties had been stayed by the AT on 26th May 1995. This was also conveyed to the ED.
If despite adjudication order attaining finality no payment is made of the penalty amount then certainly it could be said that Section 57 FERA is attracted. Here, however, with there being definitely a clear stay order passed on 8th July 2002, there was no justification for the learned ACMM to have proceeded to frame notice on 17th May 2003 against the Petitioners for the offence under Section 57 FERA. It is possible that on the date of taking cognizance of the offence on 23rd April 2002, the ACMM may have been justified in proceeding with the order since the formal order of stay was not yet passed but certainly once that order was passed further proceedings ought not to have been continued.
In any event, with the subsequent developments there appears to be no purpose served in keeping the proceedings under Section 57 FERA alive. It is urged by learned counsel for the Respondents that the matters could be sent back to the learned ACMM for appropriate orders to be passed in light of the subsequent developments. The Court sees no purpose being served in doing that except that it would delay the proceedings even further. - there is no ground made out for continuing the proceedings under Section 57 FERA qua the Petitioners. - Decided in favour of assessee.
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2015 (2) TMI 124 - DELHI HIGH COURT
Validity of detention order - Forfeiture of property under SAFEMA - Detention notice not served - Violation of principle of natural justice - Held that:- Shri Sarin was never served with the detention order, nor even made aware of it ever, during the time it was in force. The respondents were unable to show any material to say that they tried to serve it upon him, and that he could have in any manner known of its existence, in order to challenge it. In these circumstances, it was impossible for him to impugn it, for the period July 1975 to March 1977. Once the Emergency was revoked, and the detention order suffered a similar fate, there was no manner for him again to challenge the detention order as it had no consequence. Another very important aspect is that when the Emergency was in force, individuals whose personal liberty was forfeited under preventive detention laws, such as COFEPOSA, were, by reason of the Proclamation of Emergency, prevented from asserting their Fundamental Rights. Initially nine High Courts held that notwithstanding this position, orders of detention could be challenged under Article 226 of the Constitution of India. However, the Supreme Court held that such petitions were not maintainable; effectively barring even the writ remedy to those aggrieved against detention orders, in A.D.M. Jabalpur v Shiv Kant Shukla [1976 (4) TMI 211 - SUPREME COURT].
The submission of the respondents that the revocation order in the present case was not under Section 12-A, but under Section 11 is of not much consequence. The only power of revocation which could have been sought recourse to, by the Central Government, under COFEPOSA, during Emergency, in respect of orders under Section 12-A, was under Section 12-A (3) after review and recommendation to release the detenu. That class of detention orders too stood excluded by virtue of Section 2 (2) (b) third proviso; however, the first category, i.e. those detention orders that had not been revoked before cessation of Emergency, could have been revoked only under Section 11 of COFEPOSA. - revocation of the detention order, in the present case, clearly fell within third proviso to Section 2 (2) (b) and was thus excluded from exercise of jurisdiction under SAFEMA. The writ petition has to consequently succeed; the orders of the competent and appellate authority are hereby quashed. - Decided in favour of appellant.
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2015 (2) TMI 24 - DELHI HIGH COURT
Contravention of Sections 18(2) and 18(3) read with Section 68 of the Foreign Exchange Regulation Act, 1973 - Imposition of penalty - whether each of them to whom notices were issued, were during the relevant period “in charge of and responsible to the said company for the conduct of the day-to-day business of the company”. - Held that:- ED has not been able to deny that the SCN was served on FIL and its directors, including the Appellant only at the address of the company and at the time when the Appellant had ceased to be a director. It is not the case of the ED that even after coming to know, when the appeal was filed by the Appellant, that he had ceased to be a director of FIL with effect from 31st October 2001, it offered to serve him a separate SCN at his address. Consequently, it is evident that no SCN was in fact served upon the Appellant at his address as on the date of the SCN, i.e., 28th May 2002.
The ED ought to have fairly stated before the AT that since no SCN had been served on the Appellant at his ordinary place of his residence, the AO qua him should in fact be set aside and the ED should be permitted to serve a separate SCN on him. However, even before this Court it was repeatedly asserted that as far as the ED was concerned, it had served the SCN on the Appellant through FIL. Therefore the Court is constrained to observe that the fundamental requirement of the Adjudication Proceedings and Appeal Rules, 1974 (“APAR”) (1974 Rules) and in particular Rule 10 (reproduced herein below) has not been satisfied in the present case.
In terms of Rule 10(b), service of notice had to be on either the address of his place of residence or his last known place of residence or the place where he carries on, or last carried on, business or personally works or last worked for gain. There can be no doubt that as on 28th May 2002, i.e., the date of the SCN, it had to be served either at the place of residence of the Appellant or the last known place of his work. As on that date, his address was not the address of FIL. - Even after coming to know that as on the date of the issuance of the SCN, the Appellant was no longer a director of FIL and therefore the notice issued to him at the address of FIL could not obviously be treated to have been served upon him, the ED was not prepared to say that the AO qua him must be set aside on that ground.
The AT failed to deal with the central point in the appeal filed by the Appellant. It has also failed to note his submissions in that regard. - The occasion for the Appellant to avail of the defence available to him under Section 68(1) FERA, i.e., to show that he was not in charge of the day-to-day affairs of the company or that the infraction complained of had not occurred with his knowledge or that he had exercised due diligence to avoid such contravention would arise only after he was served with the SCN along with the documents relied upon against him by the ED. In this case, the documents include the statement of Mr. Pradeep Verma. It is not the case of the ED that even on the date of the AO, it had actually served on the Appellant, the documents relied upon in the SCN. Consequently, it is not open to the ED to now contend that even without the relied upon documents being served on the Appellant, he should somehow have made out his case before the AT in support of his defence under the proviso to Section 68 (1) FERA. The impugned AO was in violation of the principles of natural justice, as well as the requirement of Section 51 FEMA read with Rule 10 of the APPR. - impugned AO dated 3rd November 2004 and the impugned order dated 2nd July 2008 of the AT are unsustainable in law and are hereby set aside. - Decided in favour of appellant.
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2015 (1) TMI 1170 - DELHI HIGH COURT
Foreign exchange allocated against the license having not been utilized - Waiver of pre deposit - Imposition of penalty - Held that:- Under the statutory scheme the appellants are under an obligation to file appeal simultaneously along with penalty amount unless and until dispensation is granted under Second proviso to Section 52 (2) on the application of the appellants after getting satisfied about the prima facie good case and undue hardship of the appellants. In the instant case, the appellate has not taken care to comply the judicial order despite sufficient indulgence shown by this Tribunal by granting 50% dispensation in favour of the appellant which shows lack of bonafide on the part of the appellant. The order was passed long back on 12.02.04 where the appellant has shown total defiance towards judicial order where equity does not lie in his favour. Looking towards this situation this appeal is liable to be dismissed.
Written submissions stated to be filed by the Petitioner on 15th September, 2009 are not on record of the Tribunal. However, in view of the endorsement even if it is accepted that the written submissions in para-7 submitted that without prejudice to the submissions the Petitioner herein prayed for time of two months to comply with the order dated 12th February, 2004, the same would not enure to the benefit of the Petitioner in as much as this alternate submission of depositing the amount was not taken when the application for withdrawal of the direction of pre-deposit was being considered. - Decided against Assessee.
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2015 (1) TMI 1122 - DELHI HIGH COURT
Contravention of Section 8(3) and 8(4) read with Section 68 of FEMA read with para-7A, 20(i) of Exchange Control Manual, 1995 (ECM) - Held that:- Impugned order of the appellate tribunal and the order-in-original suffer from serious infractions of the principles of natural justice and, even on merits, it appears that the appellants were able to provide sufficient material on record to raise a serious doubt about the alleged violation of FEMA. - In the present case, the order in original, as noticed above, is primarily founded upon the response dated 03.02.2004 received from Bank of India by the ED to its communication of 08.01.2004. It is not clear as to what is the nature and content of the information elicited by the ED from the Bank of India in its communication of 08.01.2004. It also remains in suspense as to what was the nature and content of the response sent by Bank of India in its communication dated 03.02.2004. It is not clear as to who sent the said alleged communication - i.e. whether it was sent by an authorized officer of the Bank or not.
The appellants should have then approached the Bank of India and enquired about the same. This argument has only to be stated, to be rejected. Pertinently, when the appellant company demanded copies of the said communications vide their letter dated 29.03.2004, the same were not provided. Without having copies of the said communication, this Court fails to appreciate as to how the appellants could be expected to gather any information from the said Bank, or get them verified. In fact, the appellants were not even obliged to do so, and it was the primary obligation of the adjudicating authority to place all incriminating material - which was intended to be relied upon to condemn the appellants and penalize them in a quasi-criminal proceedings, before the appellants to elicit their response. The order imposing penalty is undoubtedly a prejudicial order as it entails quasi criminal and penal consequences. No such order could have been passed behind the back of the appellants, without confronting them with all the material which was sought to be relied upon and granting adequate opportunity to them to deal with the same. It was obligatory for the adjudicating authority to thereafter consider the response of the appellants, if any, and after consideration of the entire matter, pass the adjudication order.
Reasoning adopted by the Appellate Tribunal in para 19 borders of perversity, when it observes that the appellant company had not approached the Bank of India to seek clarification about the said letter dated 03.02.2004. Pertinently, it appears that the Appellate Tribunal also did not even consider it necessary to go through the said correspondences dated 08.01.2004 and 03.02.2004 between the ED and the Bank of India. The Appellate Tribunal did not consider it necessary to satisfy itself as to the nature of information sought from, and provided by the Bank of India. On this short ground, the order in original and the impugned order of the Appellate Tribunal are liable to be quashed and set aside.
Respondents have not established the violation of provisions of FEMA as alleged against the respondent beyond all reasonable doubt. There is likelihood of the appellant company having utilized the remittances for import as claimed by it. The situation has to be viewed from the context that the initial inquiry pertained to 64 remittances. Eventually, the same was narrowed down to only four, and thereafter in respect of the fourth alleged remittance, the respondents were satisfied with the appellants explanation. According to the appellants, remittances to the tune of ₹ 700 crores have been made in relation to the business of the appellant company. If one were to keep the entire conspectus of facts in view, it does not stand to reason that the appellant company would fall foul of the law in respect of such miniscule amounts as claimed by the respondent, compared to the total remittances made by it. - The amounts deposited by the appellants in pursuance of the original order of adjudication before the Appellate Tribunal, shall be refunded without any delay. Similarly, the amounts, if any, deposited in this Court shall also be refunded to the appellants without any delay. - Impugned order is set aside - Decided in favour of Appellant.
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2015 (1) TMI 1074 - MADRAS HIGH COURT
Violation of procedure contemplated in Rule 4 - Rejection of request of cross examination - Held that:- On a bare reading of the show cause notice it is seen that a complaint was made under section 16(3) of FEMA for contravention of the provisions of FEMA. The adjudicating authority on a perusal of the complaint and after considering the cause assigned by the complainant in the said complaint, stated that it appears that there is contravention in the said complaint against the petitioners of the provisions of section 3(c) read with section 42(1) of FEMA, as mentioned in the complaint. Therefore, the petitioner was required to submit reply to the show cause notice in writing within thirty days from the date of notice as to why the adjudicating proceedings as contemplated under section 13 of FEMA should not be held against them for contravention of the provisions of section 3(c) of FEMA as mentioned in the complaint, which was enclosed along with the show cause notice. The attention of the petitioners was invited to Rule 4 of the Rules. Further, the petitioners were directed to appear either in person or through their Legal Practitioners/Chartered Accountants duly authorised by them to explain and produce such documents as may be useful or relevant to the subject matter of enquiry.
There is nothing to indicate that the adjudicating authority has straight away proceeded to the stage contemplated under sub rule (4) of Rule 4. The show cause notice does not indicate any such conclusion nor it may be stated that the respondent has violated the procedure under Rule 4 of the Rules. In fact, the attention of the petitioners has been drawn to Rule 4 of the Rules. Therefore, the plea raised by the petitioner that the show cause notice is vitiated for having not following the procedure under Rule 4 of the Rules, deserves to be rejected. - Decided against the petitioner.
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2015 (1) TMI 1026 - DELHI HIGH COURT
Contravention of Sections 9(1)(b) and 9(1)(d) of FERA - penalty under Section 50 of the FERA - Held that:- Retraction of the confessional statement containing admission of wrong-doings by the appellant came after more than ten years, at the stage of personal hearing only, and not before that. Had the appellant been subjected to threat, coercion or pressure – as alleged by him rather belatedly, he would have retracted his confessional statement soon after making the same, once the alleged threat, coercion or pressure ceased to influence the action of the appellant. It is not his case that the said factors continued to influence him for 10 long years. Moreover, the appellant failed to disclose as to how he was pressurized, coerced, or tortured, and by whom, when he made the earlier confessional statement. The confessional statement was also duly corroborated by the aforesaid independent evidence viz. the list of persons to whom the monies had to be distributed, received by fax from Ubaidullah of Dubai.
Thus, the plea of the appellant, founded upon his so-called highly belatedly retraction of his confessional statement, has to be rejected. Pertinently, though the appellant sought to produce bank transaction statements to show that he had been receiving monies from Ubaidullah of Dubai after the incident in question, and his consistent case is that he had been receiving monies from Ubaidullah of Dubai even earlier, he did not produce any material evidence to show that monies were earlier being received through a legal banking channel. - The appellant has been let off rather lightly considering that he had admitted to having received ₹ 13 Lakhs in all, i.e. ₹ 5 Lakhs on 16.11.1994 and ₹ 8 Lakhs in all, on two earlier occasions. The maximum fine, in these circumstances, could have been to the tune of ₹ 65 Lakhs. However, the appellant has been let off with a nominal fine of ₹ 1.5 Lakhs. - Decided against assessee.
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2015 (1) TMI 977 - BOMBAY HIGH COURT
Contravention of the provisions of Sections 8(1), Section 6(4) and Section 6(5) read with Section 7 of Foreign Exchange Regulation Act, 1973 - Imposition of penalty - Sale of foreign currency at higher value - Held that:- Two persons identified themselves as Hanif and Rajesh Mhatre of Hotel Zam Zam. Mhatre was carrying briefcase along with him. A search revealed that one Suleman Patel with the help of Ms. Pinky Jaisinghani and Sanjay Jadhwani were operating two FFMCs. As a result of the search documents, the authorities recovered and seized the articles under a Panchanama. The identical allegations pertaining to Hanif and Mhatre tendering two pay orders along with the advice letter on the cash counter of M/s. LKP Merchant Financing Ltd. are to be found in the present show cause notice. The statements of all these persons were recorded by the officers of D.R.I. The partner of the present appellants stated that the appellant’s firm has obtained FMC license, dated 28th September 1996 issued by the Reserve Bank of India for dealing with purchase of foreign currency, that he was the person responsible for day to day operation of foreign currency dealing. The foreign currency was sold to Hotel Zam zam, which was admittedly the licensed full fledged foreign money changer. It is in these circumstances that we are of the opinion that some of the allegations on page no. 55 of the paper book pertaining to lack of authorization should not be seen in isolation.
Court is unable to accept the argument that the money or the foreign exchange leaving the authorized persons and reaching or being passed off to the unauthorized person was not the matter which was dealt with by the Hon’ble Supreme Court. Further, violation and contravention emphasized by him was not the subject matter of the Supreme Court judgment and proceedings. Once the Supreme Court was dealing with an identical allegation, identical breach and of similar legal provision and manual, then, we are unable to accept Shri Desai’s argument. The Hon’ble Supreme Court’s judgment is binding upon us. It is too well settled to require any reiteration that the judgment of the Hon’ble Supreme Court continues to bind us and will not lose its binding value merely because some argument which was canvassed before us was not raised or certain aspects were not considered or the relevant provisions were not brought to the notice of the Court. When we find that the judgment of the Hon’ble Supreme Court is dealing with the identical controversy, similar legal provision and even the allegations in the show cause notices are common, then, it would cover the matter fully. - Impugned order set aside - Following decision of Tulip Star Hotels Ltd., Peter Kerkar Versus Special Director of Enforcement [2014 (1) TMI 1348 - SUPREME COURT] - Decided in favour of assessee.
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2015 (1) TMI 929 - SUPREME COURT
Condonation of delay - whether for the purpose of counting delay in appeals against orders of adjudicating officer to the Appellate Board, the provisions of Foreign Exchange Regulation Act, 1973 or Foreign Exchange Management Act, 1999 shall apply - Held that:- The impugned order was passed by the Adjudicating Authority on 11.08.2007. It is pleaded on behalf of the appellant and was not disputed by respondents that the said adjudication order was served on the appellant on 25.10.2007. - Therefore, we hold that even u/s 52 of FERA the Appellate Board was empowered to condone the delay, as the appeal was filed before 90 days and not later than 90 days - Following decision of Thirumalai Chemicals Ltd. v. Union of India and others [2011 (4) TMI 489 - SUPREME COURT OF INDIA] - Decided in favour of appellant.
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2015 (1) TMI 883 - SUPREME COURT
Credit of Non-convertible Rupee Funds into the Non-Resident (External) Account of the person concerned - contravention of Section 6(4), 6(5) read with S.49 of FERA - Act done by consent, connivance of and attributable to the negligence on the part of the Officials - Held that:- The crediting of Non-Convertible Rupee Funds in the Non-Resident (External) Account of Dr. P.K.Ramakrishnan happened during the period August to December, 1991. Three officials of ANZ Grindlays Bank were involved in it and Show Cause Notice was issued by Respondent No.1 on 21.1.1994 to the Bank as well as the Officials for contravention of Section 6(4), 6(5) read with Section 49 of FERA, alleging that it had taken place with the consent, connivance of and attributable to the negligence on the part of the Officials. It is true that the respondent by letter dated 10.7.2001 ordered that the charges relating to ‘consent’ and ‘connivance’ shall stand deleted from the Show Cause Notice. Though FEMA came into force on 1.6.2000, Sunset clause under Section 49 of the said Act provided for filing of complaints under the FERA, 1973 till 31.5.2002. Taking advantage of it, the Respondent No.1 issued Opportunity Notice to all the three officials on 12.5.2002 and lodged the complaint on 29.5.2002. The Additional Chief Metropolitan Magistrate, New Delhi, on the same day took cognizance of the complaint for the offence under Section 56 of FERA and issued summons.
In spite of having dropped the allegations of ‘consent’ and ‘connivance’, the respondent in their complaint levelled allegations of all the three components, namely, consent, connivance and negligence. The contention of the appellant that the cognizance was taken on irrelevant consideration, is to be countenanced. There was suppression and also material omission in nonmentioning of reply sent by the appellant to the Opportunity Notice, in the complaint. Further, to substantiate the averments in the complaint, not even a single original document was enclosed. It is not known as to, on what material the Additional Chief Metropolitan Magistrate applied his mind, while taking cognizance of the statutory offence. Though the allegation of negligence can be independently looked into, considering the standard of proof in criminal prosecution, we are of the view that, in the present case, the continuance of prosecution against the appellant is not tenable in law and the proceedings are liable to be quashed. - Decided in favour of appellants.
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