TMI Blog2010 (3) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... me limits specified in the FEM EGS Regulations. That it simply cannot since the exports were complete, and so was the contravention of non-realisation of the corresponding proceeds, in 1997-98 itself. – The export was made in 1997-98 – old directors ceased to be director from 14.11.1997 - there is nothing in the complaint to explain how they could said to be in charge of the affairs of JTS and responsible to it for conduct of its business at the time of the contravention. Therefore, even on this ground, these two Petitioners are entitled to succeed. - 19881 of 2004 and others - - - Dated:- 26-3-2010 - FEMA W.P. (C) No. 19881 of 2004 Reserved on: 4th February 2010 Decision on: 26th March 2010 BHUPENDRA V.SHAH Through: Mr. V. Sridharan with Mr. Prakash Shah, Ms. Sarla and Mr. T. Sunder Ramanathan, Advocates Versus UNION OF INDIA ORS. Through: Mr. A.S. Chandhiok, ASG with Ms. Rajdipa Behura, Mr. Ritesh and Mr. C.S. Chandan, Advocates W.P. (C) No. 26 of 2005 MANOHAR LAL TANDON Through: Mr. V. Sridharan with Mr. Prakash Shah, Ms. Sarla and Mr. T. Sunder Ramanathan, Advocates Versus UNION OF INDIA ORS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause notice dated 10th August 2004 by which the Special Director, ED purportedly took note of the contravention of Sections 7 and 8 FEMA, in fact related to a period prior to the coming into force of the FEMA. No notice of the contravention of any of the provisions of FERA could have been taken by the Special Director, ED after 31st May 2002. 4. The alternative submission is that in any event, the ED could not have invoked either Section 7 or Section 8 FEMA against the Petitioners. It is submitted that the Section 7 FEMA alone deals with non-realisation of proceeds of exports of goods and services. This has to be read together with the FEM EGS Regulations 2000. Regulation 9 thereof requires the full export value of the goods to be realized within six months from the date of export. Regulation 13 (ii) read with the proviso thereto stipulates that for the failure to realise the export proceeds within the time limit prescribed, proceedings for contravention shall not be instituted till the specified period has expired. It is pointed out that since no export was made after the coming into force of the FEMA, Section 7 and Regulations 9 and 13 (ii) of the FEM EGS Regulations do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision in S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla (2005) 8 SCC 89, where the Supreme Court interpreted a similar provision, i.e Section 141 of the Negotiable Instruments Act, 1881 (NI Act) it is submitted that the proceedings against each of the Petitioners was not sustainable in law. 7. Appearing on behalf of the Respondents, Mr. A.S. Chandhiok, the learned Additional Solicitor General of India submitted that the complaint made under Section 16(3) FEMA by the ED before the Special Director stated that the ICICI Bank by its letter dated 26th June 2002 informed the Reserve Bank of India (RBI) that the total dues to it from JTS was ₹ 1073 million. As per the XOX Statement for the half-year ended 30th June 2002 the JTS had export outstanding of ₹ 261,69,37,180/- comprising of 226 GRs. According to him, therefore, even as on that date, the full value of the export proceeds were yet to be recovered and the contravention which perhaps began when the FERA was in force continued‟ even after the FEMA was enacted. It was akin to a continuing offence. 8. While issuing notice in these petitions, this Court stayed the operation of the show cause notice dated 10th Aug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GRs. JTS is shown to have had five bankers. Of these, the Exim Bank informed the RBI that JTS had only availed a term loan and had no export outstanding with them. The ICICI Bank informed the RBI that ₹ 1073 million was owed to it by JTS towards loans extended . The State Bank of Travancore informed the RBI that JTS was defunct , and that the letters addressed to the company had been returned undelivered by the postal authorities. Indian Bank too by a letter dated 11th September 2000 informed the RBI that JTS had closed down their operations since 1998-99 and that the company was evicted in 1999. Even the RBI informed the ED that letters sent to JTS at its Mumbai address were returned undelivered. By letter dated 7th December 2003 the State Bank of Travancore informed that the export outstanding of JTS was ₹ 152.95 crores in respect of 175 GRs. By the letter dated 10th December 2002 the SBI, Overseas Branch, Chennai informed that there were 8 outstanding bills aggregating ₹ 8.57 crores. However, both of them maintained that the letters sent to JTS were returned undelivered with the remarks company closed . The further letter of 10th January 2003 of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard and every other person appointed as Member and holding office as such immediately before such date shall vacate their respective offices and no such Chairman or other person shall be entitled to claim any compensation for the premature termination of the term of his office or of any contract of service. (3) Notwithstanding anything contained in any other law for the time being in force, no court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of the commencement of this Act. (4) Subject to the provisions of sub-section (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act had not been repealed. (5) Notwithstanding such repeal, - (a) anything done or any action taken or purported to have been done or taken including any rule, notification, inspection, order or notice made or issued or any appointment, confirmation or declaration made or any licence, permission, authorization or exemption granted or any document or instru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions of Section 49 (3) all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act, i.e., the FERA 1973 as if that Act, i.e., FERA 1973 was not repealed. Section 49(3) is the sunset clause and states that no court shall take cognizance of any offence and no adjudication officer shall take notice of any contravention under Section 51 FERA 1973 after the expiry of the period of two years from the date of the commencement of the FEMA. There is no dispute that the sunset period ended on 31st May 2002. Section 49 (3) and (4) FEMA were interpreted by the Supreme Court in Standard Chartered Bank v. Directorate of Enforcement (2006) 4 SCC 278. It was explained in para 32 that the word offence occurring in Section 49(3) includes criminal prosecution as well as adjudication proceedings. A combined reading of Sections 49 (3) and 49 (4) FEMA and Section 6 GC Act show that unless proceedings had already commenced against the Petitioners under the FERA for contravention of Section 18 thereof before 31st May 2002, there was no question of such contravention continuing even after the expiry of the sunset period in terms of Section 49 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttempt by the ED to proceed against the Petitioners for the contravention of Sections 7 and 8 FEMA must fail. Further neither provision can actually be invoked by the ED. 19. Sections 7 and 8 FEMA read as under: 7. Export of goods and services. (1) Every exporter of goods shall - (a) furnish to the Reserve Bank or to such other authority a declaration in such form and in such manner as may be specified, containing true and correct material particulars, including the amount representing the full export value or, if the full export value of the goods is not ascertainable at the lime of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of the goods in a market outside India; (b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank for the purpose of ensuring the realisation of the export proceeds by such exporter. (2) The Reserve Bank may, for the purpose of ensuring that the full export value of the goods or such reduced value of the goods as the Reserve Bank determines, having regard to the prevailing market conditions, is received without any delay, direct any ..... X X X X Extracts X X X X X X X X Extracts X X X X
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