TMI Blog1987 (1) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which has the effect of securing that ( a ) the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade, or ( b ) payment for the goods is made otherwise than in the prescribed manner or does not represent the full amount payable by the foreign buyer in respect of the goods, subject to such deductions, if any, as may be allowed by the Reserve Bank, or is delayed to such extent as aforesaid : Provided that no proceedings in respect of any contravention of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full amount as aforesaid has not been made in the prescribed manner.") of the Foreign Exchange Regulation Act of 1947 ("Act") designed to prevent wholesale or partial evasion of repatriation of earnings from export of goods covers only sale proceeds of goods exported "for sale" as held by the High Court of Calcutta by the judgment under appeal, or to sale proceeds of goods exported "on sale" in the context of sales completed before export also, as held by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this submission that the aforesaid expression can be so narrowly construed sol as to govern the scope of section 12(2) in such a truncated manner which renders it virtually impotent in so far as transactions of "exports on sale" are concerned. Too much is being read into too little for no more laudable a purpose than to paralyze the provision. It appears to us that this expression does not necessarily induce one to the conclusion that the Legislature wanted to prevent abuse in the context of "exports for sale" only. The expression is meaningful, relevant, and can co-exist in the context of abuse arising from "exports on sale" from completed transactions as well. The expression "no person entitled to sell, or procure the sale of, the said goods" is merely descriptive of the person who is accountable under the said provision as has been held by the Madras High Court in R. Venkatasubbu's case, ILR [1968] 3 Mad 18, which has made a correct, meaningful and purposeful approach with which we unhesitatingly agree. The whole purpose is to "identify" the accountable persons to prevent malpractices and ensure compliance. It is conceivable that the exports might be made in the name of, or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of sales. There is no warrant to assume that the Legislature has not made any provision in order to ensure that the full amount of the sale price is repatriated and foreign exchange earned therefrom is not lost to the nation regardless of whether it is in respect of "export on sale" or "export for sale". The avowed and the evident object of section 12 is to ensure that the nation does not lose foreign exchange which is very much essential for the economic survival of the nation. The exporter cannot be allowed to syphon away a part of the foreign exchange or to deprive the nation of the foreign exchange earned by the exports. Such is the philosophy of section 12. To take the view that the legitimate national interest in the sphere of preservation of foreign exchange has relevance only in the context of transactions of exports for sales and that the Legislature exhibited total unconcern for the foreign exchange earned in the context of transactions of completed sales or consignment sales, is to attribute to the Legislature irrationality, and to impute to the Legislature that it did not know its job inasmuch as it has tackled the problem only partially without any rational basis for e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rticular situation, namely, that arising in the context of failure to repatriate the sale proceeds of goods exported pursuant to a completed transaction of sale. Evidently, section 12 has been very carefully designed. Every possible situation has been conceived of and appropriate prophylactic measures to ensure the preservation of foreign exchange and prevention of syphoning off of foreign exchange, which is very much essential to the economic life of the nation, have been embedded therein. The entire subject of foreign exchange earnings relatable to export of goods has been specifically and specially dealt with in section 12. It would, therefore, be futile to search for an alibi in section 10 merely in order to support the plea that section 12 does not take within its fold the foreign exchange earnings relatable to transactions of completed sales. Pray what is the reason or the purpose for doing, so? Why take care to deal with "all" matters pertaining to export of goods and foreign exchange earnings therefrom in section 12, but even so exclude foreign exchange earnings arising out of completed transactions of sale from its scope and ambit? When there is a specific provision which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ording a reasonable opportunity of hearing, proceed to pass appropriate orders in accordance with law as may be called for by the relevant records and the material and such materials as may have been produced before him in the light of the cause shown by the respondent-company on merits in response to the show-cause notice. It will be open to the competent authority to pass an appropriate order uninhibited by any observations which may have been made by the High Court touching on the facts or merits of the case or in regard to incidental matters. We issue this direction having regard to the fact that it was in the first instance for the competent authority to form an opinion on merits on the basis of the relevant material in so far as the factual aspect was concerned. Since the High Court was quashing the notice on a jurisdictional issue, there was no occasion for making any observation touching on the facts of the case or the merits of the other contentions incidental thereto. We also wish to make it clear that the question regarding the validity or otherwise of the views expressed by the High Court in regard to points other than the aforesaid point regarding the applicability of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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