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2016 (9) TMI 352 - FOREIGN EXCHANGE Tribunal

2016 (9) TMI 352 - FOREIGN EXCHANGE Tribunal - TMI - 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 cre .....

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ation 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 th .....

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ition 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 i .....

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thur, Chairperson - We have heard Shri R.K. Handoo, advocate for the appellants and Ms. Pavitra Warriar, Legal consultant for the respondent, Enforcement Directorate and have also carefully perused the records. 2. The brief facts relevant for the disposal of the appeal are that during the investigation conducted by the Directorate in 1994-95 it was found that Jeetu G. Lalwani a person resident in Hongkong and residing at the relevant time in Pune was maintaining four NRE accounts with Punjab Nat .....

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amount of foreign exchange and Indian currency transferred from the other NRE accounts and cheques, drafts, pay orders were issued from the said NRE accounts in favour of various persons in India. Residential premises of Prakash Parwani and Geetu G. Lalwani were searched under section 37 of FERA, 1973 on 18-7-1995. Though, nothing incriminating was found at the residence of Jeetu G. Lalwani, however, foreign currencies, Indian currency, FD receipts and certain documents were seized from the res .....

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r signed blank cheque books and complete documents for a consideration of ₹ 12,000/-and was told by Rajendra D. Mehta that the foreign exchange deposited by him in the NRE accounts would be used for selling gift cheques to the persons resident in India. 4. Statement of Jeetu G. Lalwani was also recorded on 18-7-1995 and 24-7-95 who stated that he had opened ten NRE accounts with various banks in Pune out of the foreign exchange provided by the said Rajendra D. Mehta on a consideration of & .....

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nt of Rajendra D. Mehta was recorded on 22-8-1995 and 23-8-1995 in which he stated that he is a partner with appellant Prakash B. Bafna in M/s Ratnadeep Jewellers and that at the instance and finance provided by the appellant, he had arranged to open NRE accounts with various banks in the name of Prakash Parawani and Jeetu G.Lalwani and had made payment of ₹ 12,000/- and ₹ 25,000/- to the said Prakash Parawani and Jeetu G. Lalwani respectively for opening the said NRE accounts, who h .....

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the appellant had also purchased foreign exchange in the open market and handed over the same to him alongwith certain cheques drawn out of NRE accounts for the credit of NRE accounts and out of the total foreign exchange purchased and credited 30% was given to him by the appellant and 70% of the foreign exchange was purchased by him out of the finance provided by the appellant. 6. Residential and business premises of the appellant Prakash Bafna and Ratandeep Jewellers were also searched on 2209 .....

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s. He used to give the details of the names and addresses of the persons in whose names, cheques, DDs. and pay orders were issued and the profit used to be divided equally. He further told that at page 'I' of the documents seized from him by the officers of the ED, that 'RD' written on the first line means Rajendra Mehta and '27/50' RD NRE meant that he had to pay ₹ 2,75,000 to the said Rajendra Mehta for the purchase of foreign currency and for deposit in NRE accou .....

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unts without the permission of the RBI and made payments totalling ₹ 1,72,97,500 to various persons in India on behalf of the persons resident outside India without general or special exemption from RBI. 8. It is alleged that the Rajendra D. Mehta and the appellant Prakash Bafna, Prakash Parwani and Jeetu G. Lalwani had contravened the provision of 8(1) & 8(2), 9(1)(a) and 9(1)(d) r/w/Section 64 of FERA, 1973. Memorandum dt. 14-02-1996 was issued to the appellant and also to Rajendra D .....

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they failed to turn up. Therefore, the Adjudicating Authority fixed no date for hearing of the case and call notice intimating the next date of hearing i.e. 24-06-1999 were issued but the noticees did not turn up again for the hearing, therefore, the proceedings were held ex-parte and the Adjudicating Authority on the basis of evidence available held the appellant and Rajendra D. Mehta guilty of contraventions of section 8(1) and 8(2) for ₹ 1,23,29,010 and also held appellant and co-notice .....

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G. Lalwani and Prakash Parwani. 10. Aggrieved from the Impugned order dated 30-08-1999 the instant appeal has been filed by the appellant. 11. Shri R.K. Handoo, advocate representing the appellant has submitted that the Adjudicating Authority has failed to appreciate that Rajendra D. Mehta in association with his brother-in-law was doing alleged activities and the appellant had no association or connection with the disputed transactions/contraventions. It has also been submitted that the appell .....

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the Assistant Director in adjudication order No.ADJ/94/AD/JS/B/2/2000 No. 3951 dated 28-02-2000, copy of which has been filed in the proceedings against the appellant were dropped. These proceedings were based on the same statement of the appellant dated 23-09-1995 upon which the present proceedings were initiated. Further submission is that while passing the impugned order, the Adjudicating Authority has not applied judicial mind and the order is based on irrelevant considerations. 12. It has .....

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cated by co-noticee Rajendra D. Mehta in the case. Copy of the reply of SCN dated 08-04-1996 has been filed at Annexure-V. It is submitted that the Adjudicating Proceedings were held behind the back of the appellant ex-parte and no information regarding the Adjudication Proceedings was given to the appellant. Therefore, he had no opportunity to contest the Adjudication Proceedings, hence, the proceedings are liable to be quashed. The allegations against the appellant are mis-conceived and false. .....

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ile the appellant was noticee No. 2. All the statements and evidence were in fact against the Noticee No. l i.e. Rajendra D. Mehta but the Adjudicating Authority erroneously attributed the evidence against Rajendra D. Mehta in the Adjudication order to the appellant and held him guilty. This is clear from para (iv) of the findings and order heading in the impugned Adjudication Order at page 10 of the order. The Adjudicating Authority has also wrongly said that notice No. 3 and 4 and notice No. 1 .....

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hat in the impugned order it has been wrongly mentioned that another date for personal hearing was fixed on 23-03-1999 but nobody appeared. However, the Adjudicating Authority had fixed 24-03-1999 for personal hearing in respect of SCN T-4/6-B/SDG/OJD/96 in which the appellant alongwith his counsel had appeared and in pursuance of the personal hearing, written submissions were submitted on 09-04-1999 and thereafter there was no information about the alleged hearing in respect of the said SCN. Th .....

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pendent evidence. Submission is that no case under the alleged provisions of FERA, 1973 is technically made out against the appellant on the basis of the facts and circumstances placed by the respondent. The judgment of the FERA, Board quashing the proceedings has been ignored and since the appellants has been exonerated for identical allegations, therefore, the Impugned order is not sustainable. Submission is that it is against the settled legal position that a consolidated penalty can be impos .....

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t the co-noticee Jeetu G. Lalwani, resident of Hongkong who was at the relevant time residing in Pune and was maintaining NRE accounts with Punjab National Bank, Sangli Bank, Union Bank of India and Indian Bank in Pune and co-noticee Prakash Parwani, resident of Brazil and at the relevant time residing in Pune was maintaining NRE accounts with Punjab National Bank and Sangli Bank Pune. The records of the banks were checked by the ED and it was detected that the said NRE accounts were credited wi .....

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jendra D. Mehta were partners of M/s Ratandeep Jewelers and he used to finance Rajendra D. Mehta to open NRE accounts by NRIs and they used to purchase foreign exchange in local market for the deposit in the said NRE accounts and he also used to give the details of names and addresses of the persons in whose names, cheques, drafts, pay orders were issued and the profit was shared equally with Rajendra D. Mehta. He also explained the code being used in the documents and also furnished the details .....

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appellant alongwith co-noticee Jeetu G. Lalwani had received a payment of ₹ 37,000/-without the permission of the RBI therefore, a clear case of violation of the provision of 8 (1), 8(2), 9 (l)(a) and 9(l)(d) of FERA, 1973 is made out against the appellant. The noticees were not afforded due opportunity to defend themselves. Minor discrepancies in mentioning the appellant as notice No. 1 at some places is of no consequence. Amount of penalty imposed is perfectly justified. The opinion of t .....

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on by the Ld. legal consultant does not help the respondent in justifying imposition of consolidated penalty because appellant of that case is alleged to have contravened different provisions of different act and the same has no binding effect. It will be very difficult to segregate and determine the amount of penalty imposed and maintained by the Appellate Court for different contraventions if contravention of some of the provisions is not upheld. 16. The Adjudication Proceedings were held ex-p .....

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2000 it is clear that the said Adjudication Proceedings for the alleged contravention of section 9(1)(d) and 9(1)(b) r/w section 64(2) of FERA, 1973 were held against the appellant in which Murarilal M. Jalan, Sanjay M. Jalan, Nirajkumar M. Jalan, Smt. Renu M. Jalan, Rajendra D. Mehta and Prakash Parwani were co-noticees in that matter. It was alleged that during 1995, officers of the ED, Mumbai conducted enquiries into the misuse of NRE accounts maintained by certain non-resident by way of issu .....

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nt of Prakash Parwani against which they paid money in cash to Prakash Bafna (appellant herein), on behalf of Prakash Parwani. The Adjudicating Authority further held that the noticees denied having paid any money to Prakash Parwani of Brazil and stated that the transaction were made by the authorized representatives and the four noticees of the Jalan families did not know the NRI Prakash Parwani of Brazil from whose account they had received drafts. They also stated that they had received gift .....

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st all the co-noticees of the said Adjudication Proceedings and the appellant Prakash Bafna was also exonerated in the proceedings. Suprisingly the Impugned Order has also been passed by the same Special Director holding appellant guilty for the similar contraventions based upon almost same evidence. 18. From the perusal of the Impugned Order it is clear that 22-2-1999, 23-3-1999 and 24-6-1999 were fixed for hearing. The main allegations in the instant proceedings were leveled against co-noticee .....

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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 opp .....

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