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TMI Blog2012 (2) TMI 400X X X X Extracts X X X X X X X X Extracts X X X X ..... ed officers who were held to be guilty of the contravention under Section 68(1). The order of adjudication held seven Banks guilty of having contravened the provisions of the FERA, 1973 upon whom penalties were imposed together with their concerned officials who had been proceeded against. In a batch of Appeals which arose before the Tribunal, there was a difference of opinion recorded between two Members constituting the Bench The difference of opinion related to whether the concerned Banks and their officials could be held to have abetted the contravention of the provisions of the Act within the meaning of Section 64(2). The Appeals were thereupon placed before a third Member who by his Judgment dated 7 October 2009 held that the Banks and their officials had not abetted the contravention of the provisions of Sections 8(3) and 8(4) of the Act and that the remittance of foreign exchange against Letters of Credit did not amount to either intentionally aiding, instigating or engaging in conspiracy. Following the decision of the third Member, the Appeals have been allowed by the Tribunal by its order dated 12 October 2009. The order of the Adjudicating Officer has been set aside. 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 29 Mach 2000 it was alleged that Nariman Point Chemical Industries Ltd. obtained foreign exchange of US $ 54.80 lacs for the import of goods but failed to make any import. A purported insurance claim of US $ 17.32 lacs was received. In the fourth notice to show cause it was alleged that Hindustan Industrial Chemicals Ltd. obtained a remittance of US $ 33.83 lacs for the import of goods but failed to make any imports. 5. A violation of the provisions of Sections 8(3) and 8(4) read with Section 68 of the FERA was alleged. The banks together with their employees were alleged to have abetted the Hamco Group of Companies in contravention of the provisions of the Act. In so far as the Banks and their employees are concerned an Addendum was issued to each of the four show cause notices on 20 November 2000 alleging, inter alia, that by their acts of gross negligence the banks and their employees had abetted the Hamco Group of Companies in contravening the provisions of the Act. 6. The Special Director in the Enforcement Directorate by his order of adjudication dated 18 September 2003 held that the violation of the provisions of the FERA, 1973 by the four noticees belonging to the Hamc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me allowing them to open fresh Letters of Credit in favour of the very same parties to whom remittances were made under earlier Letters of Credit for which Bills of Entry had not been filed. In other words, it was evident that the officials of the banks who authorised the opening of the LCs ought to have exercised proper care and vigilance in the opening of fresh LCs, especially when the noticee companies who had opened the LCs had failed to submit proof of import evidencing the import of goods into India. Letters of Credit were opened despite the fact that noticee companies had failed to file Bills of Entry for prior imports. Remittances were made abroad by the banks, though careful scrutiny would have revealed that the import documents were deficient. On this ground, the banks and their officials were held guilty and were penalised. 7. Appeals were filed before the Appellate Tribunal amongst others, by the banks and their concerned officials. On 11 February 2009 two separate differing judgments were delivered by the Two Members of the Appellate Tribunal. Shri O.P. Nahar, Chairperson of the Tribunal came to the conclusion that the Appeals filed by the banks and by their employees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order of the third Member dated 7 October 2009 would indicate that the material on record has not been considered. The third Member has erroneously proceeded on the basis as if a criminal offence had to be established on a charge of abetting the commission of an offence within the meaning of Section 107 of the Penal Code. Moreover, it has been submitted that both the reasons which have been indicated in the order of the third Member are ex facie specious. The third Member has held that the receipt of a Bill of Entry could only happen after the remittance of foreign exchange, which was an act which had happened after the commission of contravention and not before. Similarly the purported insurance claims were received after the remittances and not earlier. On this basis it has been concluded that these later acts cannot result in a finding of abetment since the abetment of a contravention cannot take place after the contravention is complete. It was urged that the order of the Tribunal completely fails to consider the relevant material on record and since the decision has been rendered without taking into account the entirety of evidence and against the preponderating weight of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be sufficiently and precisely identified, the bill as a document of title would be without consequence; (4) Though in a large number of cases the Bills of Entry remained to be submitted by the remitter of funds, the banks continued to open fresh LCs and kept on remitting further amounts abroad without checking the veracity of the claims made by the remitter; (5) The Banks were receiving large amounts from the same overseas parties to whom remittances were made against alleged imports either under the guise of insurance claims or otherwise. 12. When the matter was carried in appeal before the Appellate Tribunal, the Chairperson of the Tribunal took the view that the circumstances which were relied upon by the Adjudicating Officer were remote and were not closely connected with the act of confirmation of the LCs against whom payment of foreign currency was made. The Chairperson was of the view that payment could not have been avoided without inviting a breach of a binding contract in international trade. The Chairperson was of the view that the discrepancies in the Bill of Lading could hardly invite the attention of anyone except at a later stage when things became absolutely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f abetment under the provisions of the FERA, 1973 had been established. The third Member has held that, (1) The receipt of a Bill of Entry can only happen after the remittance of foreign currency and not before; (2) The insurance claims were received after the remittances took place and not earlier. Since both the acts allegedly took place after the contravention had taken place, the Member was of the view that the charge of abetment could not be established. In our view, there is a considerable amount of merit in the submission which has been urged on behalf of the Union of India that the third Member before whom the matter was placed for resolving the points of difference has completely failed to consider in its entirety the material on record and the charges that were levelled against the banks and their officers. The order passed by the third Member, besides being cryptic, does not take note of all the materials which were on the record of the adjudication proceedings and from which the Appeals were filed before the Tribunal. Each of the circumstances which weighed with the Adjudicating Officer have already been noted earlier. While according to the Chairperson those circumstan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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