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FEMA - Case Laws
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2017 (1) TMI 1342
Purchase of agricultural lands in India in violation of Foreign Exchange Management Act (FEMA) - Detention of passport - Look Out Circular issued - Whether the passport of the petitioner can be impounded and the impugned notices issued by the respondents are sustainable? - Held that:- As per the instructions issued by the respondents/ department, look out circular can be issued against (i) persons with terrorist or militant links (ii) beligerent foreigners (iii) foreigners previously noticed for violations of visa conditions (iv) persons required by court in criminal/civil cases who are absconding and (v) absconding offenders wanted by Police/CBI/Customs/Central Excise/Directorate of Revenue Intelligence and other competent investigation agencies. In the present cdase, no where it was mentioned in the impugned circular that the petitioner comes under any of the categories mentioned in the instructions given by the respondents themselves.
In so far as impounding of passport is concerned, the Honourable Supreme Court in the case of Suresh Nanda vs. CBI mentioned [2008 (1) TMI 876 - SUPREME COURT], has held that the police may not have power under Section 102 (1) of Code of Civil Procedure to seize a passport or to impound the same. It was further held that impounding of a passport can only be done by the Passport Authority under Section 10 (3) of the Passports Act, 1967.as per Section 104 of Cr.P.C., a 'document' does not include a passport. In the present case, it is not the case of the respondents that they have taken necessary steps under Section 10 of the Passports Act to impound the passport Act and therefore, the mere detention of the passport of the petitioner at the airpott without following the provisions contained under Section 10 of the Passport Act and issuing the look out circular without issuing prior notice are not legally sustainable.
It is brought to the notice of this Court that after dismissal of writ petitions filed by petitioner before the Kerala High Court, the respondents themselves wanted the petitioner to appear for inquiry only at Delhi on the ground that cumulatively, investigation can be done in Delhi. At any rate, it is contended that the petitioner is cooperating with the enquiry.
It is to be noted that the petitioner's passport, which has been impugned by the second respondent, is in the custody of the authorities concerned for the past 30 days. In the meantime, the petitioner has appeared before the authorities for inquiry on 15.01.2017 and 23.01.2017 and extended his cooperation for conducting the enquiry. Therefore, impounding of the petitioner's passport is not warranted. In this case, in the impugned notices, there is no reason has been mentioned for calling the petitioner an absconder. It is also to be noted that the impugned look out circular has been issued without any prior notice to the petitioner and without giving him a reasonable opportunity. It is also not the case of the respondents that they have taken necessary action as contemplated under Section 10 of the Passport Act, without doing so, the impugned orders are legally not sustainable.
This Court direct the respondents to return the passport to the petitioner forthwith after cancelling the Look Out Circular with stringent conditions:
[i] the petitioner will appear before the authority concerned for the enquiry as and when he has been summoned when a notice is given to a reasonable time for his appearance;
[ii] the petitioner will undertake before this Court that he will specifically cooperate with the inquiry and will not abscond from the proceedings;
[iii] he will abide any other reasonable conditions which may be imposed by the authority concerned; and
[iv] he may be entitled for the assistance of a lawyer but the lawyer will be only present in the office of the respondent at the time of enquiry.
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2017 (1) TMI 1166
Penalty for contraventions of the provisions of Sections 8(1), 9(1)(a) and 14 of FERA - legal status of the appellant independently - Held that:- As seen from the records that the appellant claimed not a citizen before the Division Bench of this Court in the Habeas Corpus Petition. In the election petition filed by him, he claimed as an Indian citizen. But before the Foreign Exchange Regulation authorities, he claimed as if he is a non-resident Indian. Thus, the appellant has taken different stands, which are not permissible under law. In such view of the matter, this Court deems it fit only to hold that the order passed by the appellate authority that the appellant was a resident within India in this respect does not require any interference. Accordingly the first question of law is answered against the appellant.
Whether the appellate authority, having found that on evidence, the charges held to be not proved, can exercise the suo motu powers under Section 52 and re-frame the charges sitting in appeal and whether new evidence can be accepted by the appellate authority? - Held that:- In the present case, the appellate authority has rightly considered only the evidence that was considered by the adjudicating authority and no new material was placed or considered. It is also not the case of the appellant that the appellate authority has based its findings on some evidence, alien to the adjudication proceedings, without granting any opportunity. In the case on hand, the appellate authority had to proceed with the examination of the evidence in accordance with Section 52, as the findings and conclusions arrived at by the adjudicating authority did not logically follow. The appellate authority has also held that the primary burden of the findings rendered by the adjudicating authority would appear to be to deal with the points taken in defence and not to examine the evidence so as to find out as to how the charges can be substantiated on that evidence, and that the adjudicating officer assumed the allegations in the show-cause notice as self-evident of the charges. Hence, on that score, it became necessitated for the appellate authority to deal with the evidence for corroborating the same with the points taken in defence. It is also evident from Page-96 of the order of the appellate authority that the learned counsel for the appellant also rightly admitted that the Board has the authority to consider the matter afresh based on the evidence already collected. Therefore, the appellant cannot now question the authority, which even otherwise, is well protected under Section 52(3) and (4).
Whether the order of the adjudicating authority is vitiated on account of bias, violations of principles of natural justice and fair play as he was a part of the investigating team and a witness in the criminal case initiated by the Department? - Held that:- There is nothing on record to show that the adjudicating officer was prejudiced on the subject matter, which reflected in the adjudication process or in the decision. Upon perusal of the records, we find that the appellant was given a fair opportunity. As found by the appellate authority, the guilt of the appellant was culled out only from the documentary evidence, and the entire statements of the other witnesses were discarded. Thus the plea of bias put forth by the learned senior counsel appearing for the appellant, will not hold any water. Though the principles enunciated in the other judgments relied on by the learned senior counsel for the appellant, in respect of bias, are not in dispute, the same will not apply to the case on hand. Further, the plea of bias looses its significance in the present case, since the appellate authority had independently examined the issues based on evidence on record, afresh. Thus, the third question of law is answered against the appellant.
Whether Section 3(1) of the Companies Act, which confers a separate legal entity to the company, absolutely dissolves the liability of the Director of a company under every circumstances? - Held that:- The protection given to a company is not an absolute bar to proceed against the directors and it is to be decided on the facts of the each case put to test. In this regard, the appellate authority, after analysing the matter in detail, and also considering the evidence placed on record, came to the conclusion that the name of the company Dipper Investments Limited was used for obtaining the bank drafts, opening an account in Barclays Bank, and for crediting the amount of drafts in that account and transferring the funds so credited to the accounts of Meer Care & Desai, Westback Ltd., and Bank of Ireland. There is also a clear finding that none of these acts could be attributed to the company and that there is no evidence that these were done in the course of company's business.Even though the show-cause notice does not spell out as to how the charges can be made out on the basis of the evidence as narrated, that has been done in the inquiry during the adjudication proceedings. In view of the clear finding given by the appellate authority that the various acts done in the name of the company could not be attributed to the company and that there is no evidence that these were done in the course of company's business, it is clear that the appellant is legally liable for those acts. Accordingly, the fourth and final question of law is answered against the appellant.
Appeal decided in favour of revenue
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2017 (1) TMI 1114
Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 - forfeiture order - detention of the original petitioners - Held that:- In the present case, the original petitioner is not a person of no means. Her father owned properties and wrote a will. Later, it was cancelled and the family members had a registered deed of partition among themselves. Further, her father was a gold and silver merchant and has declared jewellery under the Gold Control Act to the Superintendent of Central Excise. All these documents have been accepted by the authorities but only doubts have been thrown without any legal basis. The original petitioner had submitted proper records to shift the burden of proof on the department. The mere fact that the Act does not require the competent authority to record a finding that the forfeited property was purchased by monies received from smuggling activities does not end the matter. The burden no doubt is on the person who is in possession of the property to explain their sources. But, once an explanation is forthcoming, then, naturally it is for the competent authority to prove the contrary.
This Court is not satisfied with the order of the Appellate Authority. As can be seen from Section 15, the Appellate Authority has ample power to call for any records from anyone and if they were not satisfied with the receipts produced by the petitioner, they could have summoned such of those documents from necessary quarters or examined witnesses in that behalf. This is especially when a property of a person is sought to be confiscated. This Court is satisfied that the original petitioner had discharged her obligation of proving her source of wealth in purchasing the property and in these two decades of litigation, she had also passed away. This is not a matter where a further remand is necessary. Further, the very same properties were under orders of forfeiture in connection with the detention of the original petitioners another son and that was released by the very same Tribunal. Again, the Tribunal, instead of relying upon the full order of that Tribunal chose to rely upon a portion of the order without any reason. The Tribunal also did not keep in mind the order of this Court made earlier remanding the matter.
This Court has no hesitation to set aside the order of the 2nd Respondent Tribunal made confirming the forfeiture order of the 1st Respondent.
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2017 (1) TMI 826
Violation of Section 8 (3) and Section 8 (4) of the Foreign Exchange Regulation Act, 1973 read with Chapter 7A.20 (i) of the Exchange Control Manual, 1995 - Held that:- Courts have repeatedly held that in quasi criminal proceedings the penalty should not be imposed merely because it is lawful to impose the penalty. Whether penalty should be imposed or not is a matter of discretion to be exercised judicially and on consideration of all the relevant circumstances. Further simplicitor from the non-compliance of placing on record no inference can be drawn that the foreign remittance was not used for the purpose of import. It is trite law that to impose a penal liability compliance should be sought within a reasonable time and a person cannot be penalised for not retaining the documents for a period of 13 years. During the course of the present appeal, exchange copy of Bill of Entry qua transaction at Sr. No. 2 has already been placed however, despite best efforts the appellant could not locate the exchange copies of Bills of Entry qua other two transactions.
In view of the belated show cause notice being served on the appellant, the defence of the appellant that it was not in possession of the copies of Bill of Entry for the two transactions is plausible. It cannot be held that the respondent has proved its allegation beyond reasonable doubt and the copies of the Bills of Lading probablise that the remittances were utilized for import.
Consequently, the impugned orders passed by the Appellate Tribunal and the Adjudicating Authority are set aside.
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2017 (1) TMI 461
Maintainability of the writ petitions before this Court - whether issue involved in these writ petitions relate to 2G Spectrum Case and therefore, this Court has no jurisdiction to entertain these writ petitions? - Held that:- Since the investigation carried on by the respondents is being monitored by the Honourable Supreme Court, it is too early for this Court to take up these writ petitions for adjudication on merits. Consequently, the preliminary objection raised on behalf of the respondents is sustained. The writ petitions are dismissed as they are not maintainable before this Court.
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2017 (1) TMI 398
Principle of segregation - Detention order - Section 3(1) of the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 - High Court has come to the conclusion that there were various grounds which formed the basis of the detention order and even if the documents pertaining to one particular ground were not furnished, that ground could be ignored applying the principle of segregation and on remaining grounds the detention order was still sustainable - whether the principle of severability of grounds, which is enshrined in Section 5A of the Act, is not applicable to the case at hand as the detention order was passed on one ground only? - Held that:- Each 'basic fact' would constitute a ground and particulars in support thereof or the details would be subsidiary facts or further particulars of the said basic facts which will be integral part of the 'grounds'. Section 3 of the Act does not use the term 'grounds'. No other provision in the Act defines 'grounds'. Different instances would be treated as different 'grounds' as they constitute basic facts making them essentially factual constituents of the 'grounds' and the further particulars which are given in respect of those instances are the subsidiary details.
When we apply the aforesaid test to the facts of this case, we are inclined to agree with the conclusion of the High Court that the order of detention is based on multiple grounds inasmuch as various different acts, which form separate grounds, are mentioned on the basis of which the detaining authority formed the opinion that it was desirable to put the appellant under detention. We, thus, reject the contention of the appellant that, in the instant case, the detention order is based only on one ground. Once it is found that the detention order contains many grounds, even if one of them is to be rejected, principle of segregation contained in Section 5A gets attracted.
In the instant case, the documents containing the statement of Pooran Chand Sharma were not given and for this very reason, the High Court rightly held that such a ground cannot be relied upon by the respondents in support of the order. However, that would not mean that if there are other grounds on which the detention order can be sustained, principle of severability would become inapplicable. If this is accepted, it would mean that provisions of Section 5A of the Act cannot be applied at all. While rejecting such a contention, it would be sufficient to point out that constitutional validity of Section 5A of the Act was challenged in this Court and repelled in the case of Attorney General for India & Ors. v. Amratlal Prajivandas & Ors. (1994 (5) TMI 235 - SUPREME COURT ) after discussing the provisions of Section 5A in the light of Article 22(5) of the Constitution. Therefore, this contention is not available to the appellant.
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