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FEMA - Case Laws
Showing 1 to 20 of 23 Records
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2016 (12) TMI 1805
Compounding application of the petitioner Company and/or its Director/s - HELD THAT:- It is provided that in case if the petitioner Company and its Director/s file an independent application under the provisions of the Foreign Exchange Management Act, 1999 and/or the Foreign Exchange (Compounding Proceedings) Rules, 2000, before respondent No.2 - Authority, the same shall be considered on their own merits, within a period of 180 days statutorily provided under the Rules. The order that may be passed and communicated to the petitioner Company or its Director/s should be a reasoned order.
Learned counsel for the petitioners states that compounding application of the petitioner Company and/or its Director/s shall be filed with all complete details and documents latest by 02nd January, 2017.
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2016 (9) TMI 1352
Contravention of Section 3(d) r/w Section 42(1)(2) of FEMA, 1999 - search - payments in foreign exchange - Held that:- No foreign currency has been recovered. There is no corroboration evidence of the fact that the payments allegedly made by the appellants were made as per the instructions from abroad. There is no evidence available to establish that the payments so made were in consideration of foreign exchange so acquired by the appellant companies towards the differential amount of alleged under-invoicing of imports made by the above said two companies. The appellants are stated to be involved in import of MS Ingots/Scrap from abroad, therefore, for this they were supposed to make payments in foreign exchange. It has not been explained in the Adjudication Order as to what benefit did the appellant gain by under-invoicing and payment in Indian currency by the appellants at the behest of sellers abroad as has been alleged.
There are discrepancies, contradictions and vagueness apart from non-adherence to the principles of natural justice affecting the process of fair trial. The case laws relied upon by the ld. CA are on the value of retracted confession and it has been held by the Hon’ble Supreme Court in Vinod Solanki v. UOI [2008 (12) TMI 31 - SUPREME COURT] that the burden is on the prosecution to show that the confession is voluntary in nature and not obtained as the outcome of threat, etc. In Piyush Saxena v. Enforcement Directorate [2009 (12) TMI 514 - HIGH COURT OF DELHI] has held that once the retraction of a confessional statement takes place the burden to prove that the statement was voluntary is on the prosecution. While in Vinod Kumar Sahadev v. UOI [2009 (12) TMI 514 - HIGH COURT OF DELHI] held that once the alleged statement was retracted the allegations of force and duress the onus to prove that the statement was voluntary shifts to the Government. The statement of the two noticees lose their sanctity in view of the retraction on the very next day and which was illegally rejected by the Investigating Officer and the Adjudicating Authority without any discussion or consideration relied on the rejection by the Investigating Authority and did not examine the veracity of the statements. In view of the above discussions the impugned order is devoid of merits and cannot stand judicial scrutiny resultantly appeals are liable to be allowed and the impugned order is liable to be set aside.
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2016 (9) TMI 1344
Guilty under Sections 18(2) and 18(3) read with Section 58 of FERA, 1973 - liability by a deeming fiction - criminal liability fastened against in charge and responsible for the conduct of the business of the company - Held that:- No evidence has been lead by the Enforcement Directorate in the Adjudication Proceedings to the effect that the respondents were in-charge and were responsible for the conduct of the business of the company. Vicarious liability as has been held by the Hon’ble Supreme Court can only be inferred against the company for the requisite statements in the complaint are made so as to make accused therein vicariously liable for offence committed by company along with averments in a petition contending that accused were in-charge of and responsible for the business of the company and by virtue of their position they are liable to be proceeded with. No vicarious liability on the part of the respondents herein has been pleaded and proved, therefore, vicarious liability cannot be inferred ipso facto by the Adjudicating Authority. We do not find any latent or patent illegality, irregularity or infirmity in the Adjudication Order. The Revision in our opinion has no merits and is liable to be dismissed.
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2016 (9) TMI 352
Proceedings leveled against co-noticee - appellant was resident outside India - Held that:- Nothing incriminating from the raid carried out at the residential and business premises of the appellant could be found. There is no documentary evidence in support of the allegations of the respondent. There is no evidence on record to show that the appellant was involved in any act of alleged purchase and sale of foreign currency. For the alleged credits in banks the bankers or any of the alleged recipient of the gift cheques etc. none of the said bankers or alleged recipients have identified the appellant. We are also of the view that there appears to be breach of principles of natural justice as only three dates in the entire Adjudication Proceedings were fixed in 1999 and the Impugned judgment was passed on 30-08-1999 ex-parte. There is no report: to the effect that the appellant was duly informed of the three dated fixed for the Adjudication Proceedings.
Thus in our considered view it is a case where adequate opportunity to defend was not afforded to the appellant. The proceedings were concluded within a span of six months while in another matter with identical allegations for the alleged breach by the same Adjudicating Authority, proceedings against the appellant were dropped. We are in agreement with the Ld. counsel for the appellant that proper application of judicial mind has not been made effected while deciding the proceedings and the Adjudicating Authority was not clear about the role of the appellant in the Impugned Order. He has at several occasions wrongly mentioned noticee number of the appellant to be notice No. l instead of noticee No.2. It is also relevant to mention that opportunity for personal hearing was given on 23-03-1999 while the same Adjudicating Authority fixed 24-03-1999 in connection with SCN No. T-4/2/B/96 dated 24-03-1994. The evidence of hand writing expert as per settled legal position Is a mere opinion, however, it carries some weight and the appellant had filed a report denying that the disputed writing was not in his hand. It may also be mentioned here that the standard of proof under FERA was more stringent as compared to proceedings under FEMA and the Adjudicating Authority recorded different findings in these two matters of alleged breach of identical contraventions against the appellant i.e. of dropping the proceedings in one matter and holding him guilty in the impugned proceedings. Reliance has been wrongly placed upon the retracted statement without assigning reasons. The impugned order is totally without reasons and is non speaking and smacks of arbitrariness, therefore, it is unsustainable and consequently the appeal deserves to be allowed.
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2016 (9) TMI 166
Defective notice - Whether the Tribunal was right in holding that the notice is defective and unsustainable? - Whether the Tribunal was right in holding that the independent properties of a relative of a convict or detenu,cannot be forfeited? - Held that:- As already held that the notice does not establish any link between the convict and the properties. It is also not the case of the petitioner that the properties were purchased out of illegal income earned in India by the convict. It is also pertinent to point out that the proceedings against the detenu was dropped on 10.02.1991. Had there been any nexus or link, the petitioner would not have dropped the proceedings. Though the burden of proof lies on the person affected under section 18, the statutory requirement for commencement of the proceedings cannot be forfeited to forfeit the properties. That stage would arise only when the notice is as per the statute. What by law requires to be express, cannot be left to be inferred. This court after careful consideration of the relevant provisions accepts the findings of the tribunal and holds that the notice under section 6 must establish the link or nexus and in the absence of the same, the entire proceedings would stand vitiated.
The returns and the explanations must have been considered. The notice itself, proceeds on the basis that many properties are agricultural lands. There is also a reference to revenue records. The income tax authorities have also accepted the agricultural income. The conduct and the findings only reflect the non suiting of the legal norms by the authority. It is also not in dispute that the remittances from Malaysia was made through proper banking channel and the properties were purchased from agricultural income and remittances. Indisputably the properties are individual properties without any nexus to the convict/detenu. The object of the act is to ensure that the properties purchased out of smuggling activities or by illegal means in violation of the provision of the SAFEM Act cannot be permitted to be enjoyed by the convict/detenu or a relative holding the property as benami. The forfeiture of a relative’s property has to be read in the context and objects of the Act. It is only when the link or nexus of the properties with the convict/detenue or to the income from such illegal activity is established, the properties standing even in the name of a relative can be forfeited. Therefore, this court concurring with the view of the tribunal holds that the individual properties of a relative, as defined under section 2 of the SAFEM Act cannot be forfeited.
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2016 (7) TMI 1341
Contravention of provision of Section 8 of FEMA, 1999 r/w Regulations 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 - failure to prove the service of either SCN or notice for personal hearing or the service of impugned order upon the appellant - Held that:- We are of the view that the respondent has failed to prove the service of either SCN or notice for personal hearing or the service of impugned order upon the appellant. The appellant has taken a specific plea that he had resigned much prior to initiation of the Adjudication Proceedings and was non-executive director and was not involved in any activity relating to export or day to day affairs of the company and had been made non-executive director for the Indore project only for saving expenditure and convenience in seeking clearance from various departments.
It is established that the services of the appellant were lent to the company M/s. Sashak Noble Metals Ltd. by its employee Sahara Industrial Services Pvt. Ltd. The ex parte order is non-speaking without reasons and violative of the principles of natural justice and the liability has been fastened arbitrarily against the appellant, who appears to have no concern with the business activities of the company relating to disputed transactions and was looking after the Indore project only. No evidence to prove that the appellant was in any way associated with the incharge Managing Director or Director for exports or his role is available and no such allegation specifically has been imputed. The Adjudication Order is improper, unjust and based on surmises and is not sustainable and is liable to be set aside. The appeal has merits and deserves to be allowed.
The appeal is allowed and the impugned adjudication order is set aside. The amount of pre-deposit if any shall be refunded by the respondent after the expiry of period of limitation for filing appeal. No order as to costs.
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2016 (6) TMI 1187
Sentencing the petitioner solely on the basis of uncorroborated testimony of sole witness Mr.Chanderkant Khemka - Held that:- Admittedly, the remedy of appeal is available against the impugned order under Section 17 of the Foreign Exchange Management Act, 1999.
Since, the petitioner has an alternative efficacious remedy, the present writ petition is dismissed. However, the petitioner is given liberty to raise all his pleas and contentions before the Appellate Authority in accordance with the law.
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2016 (6) TMI 341
Offence punishable under Section 56(1)(i) of the Foreign Exchange Regulation Act, 1973 for the alleged contravention of the provisions of Sections 18(2) and 18(3) of the Act - Held that:- The tribunal has arrived at a conclusion that the appellant cannot be held guilty for Section 18(2) read with Section 18(3) of FER Act, 1973 and the advise of the Reserve Bank of India given in its letters dated 21.1.1992 and 18.2.1994 deserve to be accepted as they are totally in consonance with legal provisions. The High Court, without an assail to the order passed by the tribunal, has adverted to the same and opined that it does not subscribe to the view expressed by the tribunal that Section 18(2) and 18(3) of the Act were not applicable to the transaction in question. The High Court could not have done that. We may note with profit that the High Court after stating that has reproduced paragraph 38 and (vi) and opined that the findings given by the tribunal are based on technical grounds and, therefore, the prosecution is liable to continue. As we perceive, the judgment of the tribunal is on merits, inasmuch as findings have been recorded after analysis of facts and the conclusion has been arrived at that the appellants have not violated the provisions of the Act. In such a situation, it cannot be said that it is a judgment rendered on technical grounds and, therefore, we are compelled to hold that the High Court has totally erred in law.
Thus we allow the appeals, set aside the judgments and order passed by the High Court as well as by the learned Additional Sessions Judge and direct that the order passed by the learned Magistrate discharging the accused persons shall stand restored.
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2016 (6) TMI 58
Sealing of office premises challenged - case registered under Sections 420, 120-B, 467, 468, 471, 406/34 of the Indian Penal Code (for short ‘IPC’) and Sections 3, 4 and 13 of the Foreign Exchange Management Act, 1999 - Held that:- The office premises of the Company, which was sealed by the police in connection with the police case, is neither a stolen property nor the object of the crime nor has any link with the commission of any offence. It is not a property which is covered by Section 102(1) of the CrPC. Hence, the sealing of the premises in exercise of power under Section 102(1) of the CrPC by the police was patently bad in the eyes of law in view of the decision of the Supreme Court in M.T. ENRICA LEXIE (2012 (5) TMI 696 - SUPREME COURT).
Keeping in mind the ambit and scope of Section 102 of the CrPC and the ratio laid down by the Full Bench of the Bombay High Court in Sudhir Vasant Karnataki Mohideen Mohammed Sheik Dawood (2010 (11) TMI 1019 - BOMBAY HIGH COURT) and the Kerala High Court in Kuriachan Chacko (2012 (7) TMI 979 - KERALA HIGH COURT), this Court is also of the considered opinion that under Section 102(1) of the CrPC the police have no power to seal the immoveable property and the word seize under Section 102 of the CrPC used under Section 102 of the CrPC would mean only actual taking possession of the moveable property. Find myself in complete agreement with the ratio laid down by the Full Bench of the Bombay High Court and the Kerala High Court in the aforementioned decisions with regard to the powers of the police officer to attach immoveable property under Section 102(1) of the CrPC.
Even otherwise, find it a bit surprising as to how the learned Chief Judicial Magistrate could have passed the impugned order dated November 04, 2015 negating the prayer made by the petitioner for unsealing the premises. Thus the Superintendent of Police, Motihari is directed to unseal the premises of the Company in question forthwith and allow the Company to run its legally operated business of the said Branch.
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2016 (6) TMI 3
Refusal to dispense with the amount of deposit of the penalty fully by Foreign Exchange Appellate Tribunal - Held that:- The learned Tribunal omitted to notice that there was unexplained delay of nine years in issuing the show cause notice. The learned Tribunal also ignored the fact that the appellant was a mere agent of the principal, Sri S.Jegathesan.
Considering the facts and circumstances of the case, we are of the opinion that the Tribunal should have dispensed with the deposit fully.
In that view of the matter, the appeal is allowed. The appellant shall be entitled to press the appeal without having to deposit any amount by way of pre-deposit under section 54 of 1973 Act. It is clarified that the views expressed herein are for the purpose of disposal of this appeal and shall not preclude the Tribunal from arriving at its own conclusion on merits in accordance with law.
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2016 (5) TMI 1383
Contravention of Sections 8(3) and 8(4) of FERA, 1973 - direction of furnishing corporate guarantee - interpretation in the review petitioner that the corporate guarantee is a business consideration - Held that:- The guarantor is bound to indemnify the authority to whom corporate guarantee is furnished. Relationship of business is not a necessary condition. Generally the corporate guarantee is furnished on the basis of overall performance and goodwill of the company for which the guarantee is furnished. This Tribunal earlier used to demand bank guarantee, however, when it was brought to the notice of the Tribunal that banks now a days provide bank guarantee only when the entire deposit is made to it, the Tribunal stopped demanding bank guarantee from the parties at the time of disposal of the applications for stay and waiver from pre-deposit. Demanding a bank guarantee in view of the poor financial conditions of an appellant in my view may tantamount to deprivation of the statutory right to appeal and for all practical purposes it will amount to demanding the deposit of entire amount of penalty imposed through the adjudication order. The case laws relied upon by the ld. counsel for the respondent justifying the order of modification of furnishing of corporate guarantee in place of bank guarantee. It may be pertinent to mention here that the corporate guarantee has been filed in compliance and must have been accepted, therefore, also the application is misconceived.
It may be observed that moving such applications and contending that the Tribunal has deviated from the routine procedure without any ground amounts to scandalizing the Tribunal & attempt to lower its image in the estimation of public and is an aspersion upon the functioning of the Tribunal. The Enforcement Directorate is warned for future to desist from making such bald aspersions against the Tribunal which may have no basis. Safeguarding the interest of revenue does not mean that a party may be deprived of its statutory right to file an appeal. The review petition consequently deserves to be dismissed. Since the petition has been argued and might have been drafted by ld. legal consultant who is fairly new in the legal field, therefore, taking a lenient view, I am not imposing costs against the Enforcement Directorate for wasting the precious time of the Tribunal involved in the litigation and not directing for initiation of any other action. The review petition is dismissed.
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2016 (5) TMI 740
Confiscation of foreign currency and imposition of penalty - Clauses (d), (e) and (i) of Section 113 of the Customs Act, 1962 - Seizure of US dollars - Import of currency as advance payments towards supply of diamonds - absence of requisite permission of Reserve Bank of India - Held that:- the greater significance and important is the absence of any special or general permission as contemplated under Section 8(1) of FERA. No such permission is produced or relied upon. In fact, that is not even the case that Jatin Jhaveri had applied for and got such permission. For the purpose of Section 8(1) of FERA, “acquisition” of foreign exchange must be with general or special permission of the Reserve Bank of India. Even if the matter of ‘bringing into India’ of the currency in question, as submitted by Mr. R.P. Bhatt, learned Senior Advocate, is taken to have been established, though that part of the matter itself is not free from doubt, the question regarding ‘acquisition’ of currency must be independently established in the light of requirements under said Section 8(1). The assessment in that behalf by the Appellate Authority under FERA and the High Court is completely incorrect.
Mr. Bhatt, attempted to rely on Notification No.FERA-81/89-RB dated 09.08.1989 as amended upto 09.03.1999, but the said notification is in relation to Section 13 of FERA and not in relation to Section 8(1) thereof. Secondly, this notification was not adverted or referred to at any stage and in any case does not deal with acquisition as contemplated under Section 8(1) of FERA. Therefore, the orders passed by the Appellate Tribunal, FERA and by the High Court while accepting the view taken by the Special Director are set aside. The order of confiscation is upheld. Since the amount of ₹ 1,83,09,525/- was refunded and credited to the account of Jatin Jhaveri during the pendency of the proceedings subject to his undertaking to return the same with interest, he is directed to refund the amount with interest @ 10% per annum within six weeks from the date of this judgment. - Appeals disposed of
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2016 (5) TMI 518
Preventive detention passed against the detenue [husband of the appellant herein] as well as few other persons - Held that:- It has come on record and noted in the order of detention that large sums of money were received in the said bank account which was opened in the name of the detenue and the money which was disbursed from this account amounted to ₹ 40.52 crores. It was further found by the detaining authority that the detenue was also one of the persons involved in Hawala transactions which were carried out. In such circumstances, satisfaction of the detaining authority to detain the detenue cannot be faulted with.
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2016 (4) TMI 782
Aggrieved person - Whether the 4th respondent, Assistant Director, Directorate of Enforcement can be said to be an “aggrieved person” from the order dated 3.7.2013 of the Adjudicating Authority, the Assistant Director, Directorate of Enforcement so as to file an appeal under Section 17(2) of 1999 FEMA Act - Held that:- Section 19 of the 1999 Act provides appeal to the Appellate Tribunal against an order; (i) passed by the Adjudicating Authority other than those referred to in Section 17(1); and (ii) an order of the Special Director of Appeals. Under Section 17, appeal is provided to Special Director only against the Adjudicating Authority (Assistant Director or Deputy Director of Enforcement). Thus appeal under Section 19 shall lie to the Appellate Tribunal when adjudication is made by an authority other than the Assistant Director and Deputy Director. In event it is held that a person aggrieved within the meaning of Sec.17(2) cannot include the Assistant Director who is the complainant or Director of Enforcement who is empowered to enforce the provisions of the Act, there will be no remedy available against an order of the Adjudicating Authority, viz., Assistant Director and Deputy Director in the event of they passing illegal adjudication order. For eg., in the event the Assistant Director passes an order finding contravention of the provisions of Section 13 but rejects the application on technical ground whether there shall be no remedy against such an order. The right of appeal given to the person aggrieved has to be given meaning and purpose which may advance the object of the Act. Denying right of appeal against any order passed by the adjudicating authority shall be defeating the purpose and object of the Act. Hence we are inclined to take the view that the Assistant Director, who is also a complainant can file appeal before the Special Director under Section 17(2).
When Officer of the rank of Assistant Director and above in the Directorate of Ministry of Finance has been empowered to file appeal under Section 35 of the 1999 Act in the High Court, we are not persuaded to accept the submission that Assistant Director was incompetent to file an appeal before the Special Director. More so, both in the memorandum of appeal as well as the counter affidavit it has been categorically stated that the appellant is authorised to file appeal. Thus submission raised by the learned counsel for the appellant that the 4th respondent was not competent to file the appeal and the appeal was not maintainabale has to be rejected.
Violation of the principles of natural justice - Held that:- It is relevant to note that the Adjudicating Authority has recorded the findings of contravention and imposed penalty however refused to confiscate the amount seized. No appeal was filed by the appellants against the order of the Adjudicating Authority imposing penalty. Thus the appellants were not allowed to raise submissions regarding finding of contravention. Scope of the appeal filed was as to whether the Adjudicating Authority has rightly refused to confiscate the amount seized or the amount deserves to be confiscated. We do not find any violation of principles of natural justice as contended by the learned counsel for the appellant. In the result, we find no merit in the appeal. Writ Appeal is dismissed.
As no such substantial question of law is involved as to the interpretation of this Constituition so as to enable us to grant the certificate under Article 134A of the Constitution of India
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2016 (4) TMI 759
Default to file a private paper book - Held that:- The delay has been continuing over last eight years. Even after this Court had permitted the applicant/appellant to file a private paper book, still the default has continued. It is not known why the applicant/appellant has not been able to trace the record. The explanation therefore, does not inspire much confidence.
The Director of Enforcement cannot go on giving instructions to seek time or to set aside a conditional order. This mechanical exercise demonstrates the casualness on the part of all concerned in the Directorate of Enforcement. We think eight years delay is a long enough period for directing investigation. Yet, for the fault of the Director of Enforcement and his team, we do not wish to adversely affect the larger public interest. In the circumstances, we pass the following order :-
(a)On the applicant paying to the respondents costs quantified at ₹ 10,000/- in each of these appeals and which should be paid within two weeks from today, we grant them time till 17th December, 2015 to file complete paper books in all appeals.
(b)If such compliance is made and receipt of payment of costs is shown, the Registry to allow the appellant/applicant to prosecute each of these appeals on merits and in accordance with law.
(c)No extension of time will be granted for payment of costs or complying with the orders of this Court.
(d)Hereafter, no civil application will be entertained.
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2016 (4) TMI 715
Proceedings under Section 51 of the Foreign Exchange Regulation Act, 1973 - Currency seized from the premises of assessee should be confiscated to the Central Government in terms of Section 63 of the Foreign Exchange Regulation Act, 1973 - maintainability of the appeal filed by the respondents before the Tribunal - Held that:- A careful comparison of the provisions of the Foreign Exchange Regulation Act, 1973 and the Foreign Exchange Management Act, 1999 would show that there was no post of Special Director under the Foreign Exchange Regulation Act, 1973. Under the Foreign Exchange Management Act, 1999 a Special Director was created only as Appellate Authority, though a person of the rank of Director would also be an Adjudicating Authority. Therefore, the decision in Rama Arangannal [1980 (8) TMI 203 - HIGH COURT OF MADRAS ] and Mohtesham Mohd. Ismail [2007 (10) TMI 273 - SUPREME COURT ] will not be of any assistance to the appellant, in view of the fact that the Department could be taken to be an aggrieved person and that the right of appeal under Section 19 of the Foreign Exchange Management Act, 1999 is conferred upon any aggrieved person. Since the Original Order of Adjudication was by the Collector of Customs, nominated under Section 16(1) of the Act, the appeal filed by the Special Director of Enforcement, before the Tribunal cannot be treated as not maintainable. The Department will come within the meaning of the expression "aggrieved person". Hence, the preliminary contention regarding the maintainability of the appeal filed by the respondents before the Tribunal, is liable to be rejected.
On merits, as rightly observed by the Tribunal, the appellant did not file any appeal as against the finding that he was guilty of violation of Section 9(1)(d) of the Act. The discretion supposedly exercised by the Original Authority to let off the appellant with a penalty of ₹ 25,000/- cannot be approved. First of all we do not think that he had a discretion. Even assuming that he had a discretion, the manner in which the first authority exercised the discretion and the reasoning given by him are wholly unsustainable as can be seen from the extract of para 21 of the order of themOriginal Authority, which reads as follows:-
"However, the case is about 9 years old and since it is an endeavour to complete the adjudication proceedings, under the repealed Foreign Exchange Regulation Act, 1973, I take a lenient view and impose a penalty of ₹ 1,00,000/- (Rupees One Lakh only) on Shri S.M.Sultan, in terms of Section 50 of FERA, 1973. "
Therefore, we are of the view that the order of the Tribunal does not call for any interference
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2016 (4) TMI 677
Order of detention - Held that:- There are previous decisions of Division Bench of this High Court that detaining authority is under obligation to comply with the requirements by formulating grounds for detention and on factual aspect also, there is no reason to detain such person and therefore, as recorded herein above, the Division Bench has gone to the extent of saying that "a grosser case than this is yet to be seen.
Thus the impugned order of detention cannot sustain. The petition is allowed resulting into quashing and setting-aside the impugned order of detention dated 11.6.1976 at Annexure 'A' to the petition and declaration under Section 12A of the COFEPOSA, 1974 at Annexure 'B' dated 11.6.1976 and quash and set-aside three notices under Section 6 of SAFEMA, 1976, Annexure 'D' Collectively dated 28.4.1977, 20.1.1997 and 23.3.1977.
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2016 (4) TMI 615
Issue of grant or revocation of grant of licence - Held that:- The licence to import was vitally connected with the shareholding of Kamal Kr. Datta and the percentage shareholding of his brother Sajal Datta. If the number of shares issued to Kamal increased on the basis of importation of those items, the percentage shareholding of Sajal was likely to fall. Therefore, both the company and its principal shareholders Kamal and Sajal had an interest in the grant of the licence or revocation of it, by the Reserve Bank of India. As far as the decision Life Insurance Corporation of India v. Escorts Ltd. [1985 (12) TMI 289 - SUPREME COURT OF INDIA ] and others is concerned, none doubts the authority of the Reserve Bank of India to grant the licence. But it should be remembered that the Reserve Bank of India, like other creatures of the Constitution and the Statutes is amenable to a writ of mandamus commanding it to do its duty. In the two previous writ applications orders were passed by this court directing the Reserve Bank of India to consider the issue of grant or revocation of grant of licence upon hearing Kamal and Sajal. Therefore, both the brothers had the right to approach the court complaining of failure on the part of the Reserve Bank of India to discharge this duty, by refusing to pass an order or by passing a wrong order.
Applicability of res judicata - Held that:- The shares had been allotted to Kamal subject to the outcome of the writ. No, doubt, the Hon’ble Judge had expressed his utter disgust at Kamal in preferring the writ applications to nullify the allotment of shares in favour of Kamal but nowhere it confirmed the said allotments. It certainly held oppression of Kamal by Sajal and set aside the order of this High Court in the Company Law Board appeal dated 31st March, 2005 and also all resolutions of the board from 19th April, 1995 onwards. It reversed the decision of the Board of Directors alloting additional shares of ₹ 40 lakhs and so on. But not even for a moment did the court even make any comment with regard to the 30,55,329 equity shares issued to Kamal provisionally pending the writ. The passing observation of the Court is not even obiter dicta. Therefore, the point of res judicata raised by Mr. Kapur also fails
Neither adjudication of penalty nor criminal prosecution can be undertaken as the period of two years from the date of commencement of the 1999 Act has long elapsed. Either a civil proceeding for penalty had to be started by issuance of a show cause notice or cognizance of the offence should have been taken by a criminal court within two years of commencement of the Act, 1999, under Section 49 of FEMA, 1999. Since it came into effect on 1st June, 2000 any action should have been taken by 31st May, 2002. The preservation of old rights and liabilities under the FERA, 1973 was restricted for this period and to this extent only. At this point of time, even if it is assumed that the importation was wrongful, no action can be taken, by operation of law. If a new statute after repeal of an Act does not contemplate any action in relation a past illegal act under the repealed statute, then the new statute has the effect of legitimising that illegality.
Lastly, the importation was made more than 20 years ago. These capital goods have spent their life. Their value, now after depreciation is nil. At the time of their importation their declared value was ₹ 3,05,53,290/-. Against this value, shares were allotted to Kamal. Even if Sajal now succeeds, the equipments, cannot be returned to Kamal. The monetary value has to be refunded with interest from the other assets of the Company. That is plainly not permissible or feasible. W.P. fails
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2016 (4) TMI 366
Violation of provisions of FERA by the SBI officials - Validity of summons - making full advance payment to the tune of US$ 38 million without either obtaining any prior permission of the Reserve Bank of India (‘RBI’) or any guarantee from an International Bank of repute situated outside India to safeguard their money - Held that:- petitioners are not covered under Sub-section (ii) of Section 49 of FERA for abetting or not complying with all or any such conditions.
Summoning order dated 30.05.2002 was issued just two days prior to the repealing of the FERA Act as on that day hundreds of such complaints were filed and process was to be issued in all those complaints before 01.06.2002 when new Act in the shape of Foreign Exchange Amendment Act, 1999 (FEMA) was to come into force in place of FERA, 1973. The said summoning order itself shows that the Trial Court has not considered the aspect of criminal liability of the petitioners under Section 68 of FERA having position of subordinate officers other than Managing Directors, Directors and Executive Directors as per the provisions of Section 68 of FERA.
The respondents deliberately and willfully ignored the investigation conducted by CBI whereby, chargesheet at Para 2 confirmed that C.K. Ramakrishnan and D.S. Kanwar who were functioning as Managing Director and Executive Director respectively in the petitioners company were responsible having domain over the funds of the company during the year 1995-96 and they dishonestly in connivance with officials of M/s. Karsan Limited, a Turkish Company and other accused persons, directed the bank officers to remit US$ 38 million to the account of M/s. Karsan Limited. Moreover, the facts of the investigation have been concealed by the respondent before the Trial Court and since the sunset period was expired, therefore, hurriedly without going through the material on record, the Trial Court had issued the summons against the petitioners.
Complains and Summons quashed - Decided in favor of petitioner.
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2016 (2) TMI 1107
Contravention under Section 8 of FEMA, 1999 - liable for the acts or omissions committed by company representative - Held that:- Since the appellant Ole Peter Tollefson has not filed any proof that he actually secured loan from bank in Spain therefore in view of the admission of the execution of the disputed invoice by the appellant, no other inference except that it related to export of building material can be inferred. The appellant company will thus be legally liable for the acts or omissions committed by its representative who happens to be its director and practically all in all in the company. No interference in the findings of the Adjudicating Authority in respect of liability of the appellant company and appellant Ole Peter Tollefson is warranted. Thus it is of the view that the penalty imposed against the appellant company appears to be on the higher side therefore it will be just, fair and proper if the penalty upon the appellant company is reduced to ₹ 4 lakhs instead of ₹ 6 lakhs while maintaining the penalty of ₹ 1.20 lakhs against the appellant Ole Peter Tollefson.
In view of the above, the appeal is dismissed in respect of findings of contravention under Section 8 of FEMA, 1999 r/w relevant regulations and the order of the Adjudicating Authority is affirmed in this respect, however the amount of penalty imposed against appellant company is modified and reduced to ₹ 4 lakhs from ₹ 6 lakhs as has been imposed vide the adjudication order. The amount of penalty imposed against the appellant Ole Peter Tollefson is maintained. It has been informed that total penalty imposed by the Adjudicating Authority has been deposited by the appellants with the Enforcement Directorate. After the expiry of the period of appeal, the surplus amount of ₹ 2 lakhs shall be refunded to the appellant company. Copies of the judgment be sent to both the parties.
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