TMI Blog2015 (7) TMI 1268X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, without any merits and requires no further interference by this Tribunal except that the amount of fine is reduced to ₹ 2,44,70,000/-. The appeal is therefore, partly allowed. The application seeking stay of recovery of fine from the appellant is also dismissed and the stay order granted by this Tribunal is vacated. The appellant shall be entitled to pay the amount of fine of ₹ 2,44,70,000/- within four weeks, failing which the respondent shall be entitled to recover the amount from the appellant. - F.P.A.-PMLA No. 457/DLI/2013 and M.P.-PMLA No. 1007/DLI/2014 - - - Dated:- 9-7-2015 - Anil Kumar, Chairperson, Shri Arun Kumar Agarwal, Member and Dr. Rabi Narayan Dash, Member Shri S.C. Gupta, Tax Consultant, for the Appellant. Shri Satish Agarwal and Ms. Pooja Bhaskar, Advocates, for the Respondent. JUDGMENT The appellant has preferred this appeal under Section 26 of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as the Act) against the order dated 14th February, 2013 passed by the Director, FIU-IND in original Number 1/Dir/FIU-IND/2013 holding that the appellant has failed to comply with Section 12 of the PMLA and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTRs for the period from 1-4-2006 to 30-11-2010 involving 2697 transactions of ₹ 10 lakhs and above. The appellant was directed to show cause as to why fine u/s 13 of Prevention of Money Laundering Act, 2002 (PMLA or the Act) should not be levied on the appellant. 2.4 That the appellant filed another reply dated 7-7-2011 requesting that the lapse was inadvertent and not deliberate. The appellant again requested for condonation of the mistake. The appellant alleged that it believed that the matter had been closed by FIU. However, after a gap of more than seven months, a letter dated 8-2-2012 was received by the appellant company from the Deputy Director, FIU-India granting an opportunity for personal hearing to the appellant company. Hearing was given to the appellant on 12-2-2012. Thereafter, personal hearing was given to the appellant on 28-2-2012 before the Director, FIU-India. 2.5 The appellant alleged that it clarified all queries raised by the Director, FIU-India. The appellant company also filed a letter dated 23-3-2012 reiterating their submissions and request to condone the delay in filing the CTRs. However, a draft order was served on the appellant along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing a fine of ₹ 2,69,70,000/- especially in view of amendment to Section 13 of the Act. The plea of the appellant is that the respondent has not given any reasons for ignoring the sub-section (a) of the amended Section 13 of the Act which contemplates that a warning can be given to ensure compliance without levy of financial penalty. According to the appellant, the respondent could not rely on AIR 1963 SC 1618 and AIR 1977 SC 1516 while passing the impugned order. 4. The plea of the appellant is that in the absence of definition of failure in the statute, the fine imposed vide the impugned order could have been one failure for delay in submission of CTRs for the entire period instead of treating each individual transaction as a separate failure, attracting penal provisions for failure and thereby imposing the fine of more than ₹ 2.69 crores in the impugned order. Further plea of the appellant is that submission of CTR being in the nature of monthly compliance, any failure in submitting CTR cannot be treated as failure by way of each individual transaction. The impugned order in the circumstances is alleged to be based on presumptions, conjectures and surmises and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also furnished on 5th January, 2011 of cash transactions for the period 1-4-2006 to 30-11-2010 on a Compact Disc to the respondent. 6.2 The respondent also considered RBI Master Circular No. DNBS (PD)CC No. 152/03.10.42/2009-10, dated 1st July, 2009 which prescribes the requirement of filing of CTRs and the format for filing of such CTRs. Since the appellant had failed to file CTRs for 2697 transactions, a show cause notice dated 13-6-2011 asking appellant as to why penalty should not be levied on them under Section 13 of the Act for failure to comply with provisions of Section 12 of the Act read with Rules 3, 7 8 of the Rules in failing to report CTRs to Director, FIU-IND in respect of 2697 transactions in excess of ₹ 10 lakhs that took place over the period 1-4-2006 to 30-11-2010 was given. A reply dated 7th July, 2011 was filed by the appellant seeking apology for the delay in filing the CTRs and requested for condoning the delay, stating it to be an unintentional and bona fide mistake. An opportunity for personal hearing was also granted to the appellant vide letter No. 9-69/2010-FIU-IND, dated 8th February, 2012. The hearing took place on 28th February, 2012 at 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions as per Section 12 of the Act. 8. The appellant had also raised the following pleas before the respondent which have been decided by the impugned order. The appellant had raised the following pleas : (i) there was absence of principles governing the levy of a fine or penalty such as intent, any blatant disregard of law, wanton negligence or lack of due diligence and reasonable cause; (ii) rule of limitation applies as proceedings had been taken up beyond reasonable time; (iii) quantum of penalty @ ₹ 10,000/- for each transaction was unreasonable, as Section 13 of the Act refers to fine for each failure which should be related to Muthoot s obligation to file monthly CTR returns; (iv) in the absence of available precedence u/s 13(2) of the Act for determining the quantum of fine, the general law regarding penalties, as applied in fiscal and economic legislation such as the IT Act, the SEBI Act and RBI Act and other allied legislations as pronounced by the Apex Court and other judicial authority should be followed; (v) in view of proposed amendments in the Act, fine should be imposed as a last resort after exhausting remedies being provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er exhausting other available persuasive remedies proposed in clauses (a) to (c) of the amended Section 13(2) of PMLA, is not acceptable as the non-compliance and the associated sanctions have to be adjudicated under the law in force at the time of adjudication. Muthoot s plea that the proceedings are barred by limitation is not tenable as the PMLA does not stipulate a time limit for initiation of proceedings for non-compliance. On the other hand, sufficient time and opportunity has been given to Muthoot at every stage of the adjudication proceedings to present its defense in accordance with the principles of natural justice. The case laws cited by Muthoot are not applicable or germane to the current case, as this adjudication is being made after full consideration given to the facts and circumstances of the case, after following the principles of natural justice and giving full opportunity to Muthoot (the noticee) to present its defence 10. In reply to the pleas and contentions raised in the present appeal, the respondent has reiterated the reasons as given in the impugned order dated 14th February, 2013. 11. This Tribunal has heard the learned counsel for the partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the power enjoyed by the Appellate Tribunal in interfering with a detailed order which is passed in exercise of discretion by the Statutory Authority and to reverse it in the facts and circumstances? In our considered opinion the Appellate Tribunal exercises a statutory power which is limited, qua an order passed in discretion. It is now well-settled that if the discretion exercised in passing the order is sound and judicial, according consideration to all available material on record, conforming to the well-established principles governing the passing of a discretionary order and the order does not result in any miscarriage of justice, the Appellate Tribunal would have no scope to exercise its power to reverse the order under appeal even if it has contrary view in the matter. The extent of power of the appellate Court was enumerated by the House of Lords in Evans v. Bartlam, (1937) 2 All E.R. 654 which is extracted for reference : It is clear that the Court of Appeal should not interfere with the discretion of a judge acting within his jurisdiction unless the court is clearly satisfied that he was wrong. But the court is not entitled simply to say that if the judge had jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the exercise of the said discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of discretion under appeal solely, on the ground that if it had considered the matter at the trial stage it would have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court s exercise of discretion. As is often said, it is ordinarily not open to the appellant court to substitute its own exercise of discretion for that of the trial judge; but if it appears to be appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts and has adopted an unjudicial approach then it would certainly be open to the appellate court - and in many cases it may be its duty - to interfere with the trial court s exercise of discretion. In cases falling under this class the exercise of discretion by the trial court is in law wrongful and improper and that wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contemplates default per transaction and the scope cannot be enlarged or restricted on the basis of any other criteria. Section 12 of the PMLA lays down the obligations of the appellant reads as follows : 12. (1) Every banking company, financial institution and intermediary shall- (a) maintain a record of all transactions, the nature and value of which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed; (c) verify and maintain the records of the identity of all its clients, in such a manner as may be prescribed : Provided that where the principal officer of a banking company or financial institution or intermediary, as the case may be, has reason to believe that a single transaction or series of transactions integrally connected to each other have been valued below the prescribed limit so as to defeat the provisions of this section, such officer shall furnish information in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the date of occurrence of such transactions. The word transaction is defined in sub-rule (h) of Rule 2 which reads as follows : 2(h) transaction includes deposit, withdrawal, exchange or transfer of funds in whatever currency, whether in cash or by cheque, payment order or other instruments or by electronic or other non-physical means. 15. A plain reading of Section 12(1)(a) read with Rules 2(h) and 3 shows that the appellant was required to maintain a record of all cash transactions of the value of more than rupees ten lakhs or its equivalent in foreign currency and of all series of cash transactions integrally connected to each other which have been valued below rupees ten lakh or its equivalent in foreign currency where such series of transactions have taken place within a month. Section 12(1)(b) requires that appellant shall furnish information of transactions referred to in clause (a) of sub-section (1) of Section 12 of PMLA to the Director FIU India within such time as may be prescribed. From a plain and careful consideration of the language employed in Section 12(1)(b) it is clear that the primary obligation cast on the appellant was of furnishing infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tionary order passed by the statutory Authority. In the case of Allahabad Bank Ltd., it filed Cash Transaction Reports which were rejected due to fatal errors in the reports and Director FIU India held that Allahabad Bank Ltd. failed to correctly report 19428 cash transactions over a period of 14 months and taking a lenient view imposed a fine of ₹ 50,000/- per month totalling ₹ 7 lakh. The Director FIU India further held that Allahabad Bank Ltd. failed to put in place a system for examining and monitoring transactions and report suspicious transaction for a period of 51 months and imposed a fine of ₹ 10,000/- per month totaling ₹ 5.10 lakhs. The appeal filed by Allahabad Bank Ltd. was dismissed. In the case of Bombay Mercantile Co-op. Bank Ltd., it was alleged that it failed/filed incorrect Cash Transaction Reports in respect of 4859 transactions during the period from April, 2006 to July, 2007 and taking a lenient view, Director FIU India imposed a fine of ₹ 1,00,000/- which was though less than the statutory minimum fine prescribed. The appeal filed by the Bombay Mercantile Co-op. Bank Ltd. was dismissed by this Tribunal. The word failure in Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute on the basis of rules, but the rules cannot travel beyond the Act and have to be read subject to the provision of the Act. No ambiguity can be ascertained in the concerned statute. The Hon ble High Court of Delhi in the case of All India Lakshmi Commercial Bank Officers Association v. Union of India, (1985) 20 TAXMAN 412 (Delhi) had held as under : The dominant purpose in construing the provisions of a statute is to ascertain the intention of the Legislature. A cardinal rule of construction is that the Legislature speaks its mind by using correct expressions. The Court should thus adopt literal construction unless there are compelling reasons otherwise. If a literal construction of a particular clause leads to manifestly absurd or anomalous results which could not have been intended by the Legislature, then the Court may do some violence to the words and achieve the obvious intention. Another rule of interpretation is that a statute must be construed according to its plain language and neither should anything be added nor subtracted unless there are adequate grounds to justify the inference that the Legislature clearly so indicated... But the Rules cannot travel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led one, on which the writ petition has been allowed by the High Court is unsustainable in law and indefensible in principle. Since we have come across many such instances, we think it necessary to deal with such pleas at a little length. Generally speaking, the mere fact that the respondent-authority has passed a particular order in the case of another person similarly situated can never be the ground for issuing a writ in favour of the petitioner on the plea of discrimination. The order in favour of the other person might be legal and valid or it might not be. That has to be investigated first before it can be directed to be followed in the case of the petitioner. If the order in favour of the other person is found to be contrary to law or not warranted in the facts and circumstances of his case, it is obvious that such illegal or unwarranted order cannot be made the basis of issuing a writ compelling the respondent-authority to repeat the illegality or to pass another unwarranted order. The extraordinary and discretionary power of the High Court cannot be exercised for such a purpose. Merely because the respondent-authority has passed one illegal/unwarranted order, it does not e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities in exercise of their quasi-judicial power, we express no opinion. That can be dealt with when a proper case arises. 20. Therefore, on the basis of the orders of the respondent in case no. FIU-IND-3/2010, dated 26-10-2010 in the matter of the Union Bank of India, Order No. FIU-IND-1/2010, dated 25-10-2010 in the matter of Allahabad Bank Ltd. and in the case of the Bombay Mercantile Co-op. Bank Ltd. vide order dated 11-2-2009, the appellant is not entitled to claim that the fine can be imposed only on the basis of monthly reports not filed by the appellant and not on the basis of transactions not reported by the appellant. 21. The appellant has admitted non-reporting of 2697 cash transactions repeatedly without any qualification. The penalty has been imposed on the basis of admission made by the appellant. Appellant, itself had sought condonation of their failures which has not been done. This cannot be construed to be an error in the order passed by the respondent which would require interference by this Tribunal in view of the scope of the power of this Tribunal in appeal. The Appellant had also tried to blame one of its officer leading to failure on the part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
