TMI Blog2021 (1) TMI 1035X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the Adjudicating Authority. The Adjudicating Authority shall decide the case relating to the present appellant on all legal and factual issues after affording opportunities to both the parties i.e. M/s. South Indian Bank Ltd. and the Enforcement Directorate. Appeal allowed by way of remand. - FPA-FE-58/MUM/2009 - - - Dated:- 25-1-2021 - Shri G.C. Mishra Acting Chairman For the Appellant : Shri Madhav Khurana, Advocate, Shri Aditya Mukherjee, Advocate, Ms. Satya Jha, Advocate, Ms. Riya Arora, Advocate For the Respondent : Shri Rajeev Awasthi, Advocate JUDGMENT FPA-FE-58/MUM/2009 The present appeal has been filed by the South Indian Bank Ltd. (SIBL) against the Adjudication Order No. ADJ/22-27/B/SDE/KNR/2009-FERA dated 09.03.2009 on the following facts and grounds:- 1. SIBL is a banking company incorporated under Indian Companies Act with registered office at Trichur, Kerala having its branches throughout India and one of such branch is at Nariman Point, Mumbai-21. 2. It is the case of the appellant that the Adjudicating Authority has imposed a sum of ₹ 63 Crores on the allegation of abetment because, allegedly the import documents we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) of FERA, 1973. 7. And that on 13.2.2002 a corrigendum/addendum was issued vide SCN-I above where under three banks including SIBL s, Nariman Point s Branch was also impleaded as noticee. The SIBL is not a party to the other SCNs. 8. And that, it is alleged in the said SCN-I that Shri S. Kasturi Rangan was the Manager of the SIBL, Nariman Points Branch, Mumbai and during his tenure in the said bank and branch and that during the period July, 1991 to February, 1994, 09 accounts were opened in the name of following entities and remitted huge amount of foreign exchanges to different companies out of India as detailed below:- 1. M/s. S.R. Diamonds opened on July, 1991 vide account no. 782 opened by Shri Suresh Ratilal Mody, Proprietor of M/s. S.R. Diamonds remitted a sum totaling US $ 44,523/- during the period 16.08.1991 to 27.09.1991 to M/s Lawram Import Export, Singapore through the aforesaid account. 2. M/s. Nirmal International opened on July, 1991 vide account no. 783 opened by Shri Nimesh Maganlal Patel, Proprietor of M/s. Nirmal International remitted a sum totaling US $ 7687.50/- during August, 1991 to M/s. Lawram Import Export, Singapore through the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the goods for which the foreign exchanges were remitted nor the foreign exchange so remitted were surrended to any authorized dealer. 10. And that, it is the case of the appellant that out of the aforesaid 09 accounts import documents in respect of 04 accounts namely M/s. S.R. Diamond, M/s. Nirmal International, M/s. Kumar Exports and M/s. D.N. Exports were received directly by the appellant bank s branch at Nariman Point through the seller s bank, Bank of India, Singapore and that the SIBL s foreign exchange department of Chennai was making the remittances on behalf of SIBL s branch at Nariman Point from 29.07.1991 to 08.06.1994 based on the request and certificate of the Brach certifying that all exchange control formalities are duly complied with as prescribed by RBI, the parties also present postal wrappers copies of the bills of entry duly attested by the Custom Authorities showing that the goods have been cleared from home consumption from the customs. 11. For that, the name of appellant bank branch has been added prefixed before the names of its two officials named below by way of corrigendum/addendum dated 13.02.2002 under SCN-I impleading SIBL s branch as noticee, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the final hearing of the case by the Adjudicating Authority. It is further contended by the learned counsel for the appellant that the appellant is prejudiced by the delay in delivering the impugned order. It is contended by the learned counsel for the appellant, during the course of argument that, the Adjudicating Authority has failed to address the contentions made by the SIBL on facts and legal issues raised for the legal scrutiny of the impugned order by the Appellate Tribunal. (A). For that, there is more than two years delay in passing the impugned order. The last hearing before the Adjudicating Authority took place on 13.12.2006 and order is passed on 09.03.09. The SIBL by relying on the judgments on Hon ble Supreme Court, in the case of Bhagwandas Fatechand Daswani Ors. v/s. H.P. International Ors. JT 2000 (1) SC 266 and Kanahaiyalal Ors. v/s. Anoop Kumar Ors., JT 2002 (10) SC 98 , sought setting aside of the impugned order on this short ground. (B). For that, the provisions of Sections 8(1), 8(3) and 8(4) of FERA, 1973 are not applicable to the authorized dealer. The SIBL is an authorized dealer, as such there is no scope of making allegation of abetm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Human person or body of human individuals or a company who is deemed to be a legal person by fiction lf law. The branch at Nariman Point, Mumbai of the appellant bank is not a person , hence the whole proceedings and penalty are a nullity in law. The word person has not been defined under FERA, 1973 therefore reliance is placed on definition in General Clauses Act under Section 3(42) is relevant and applicable and that the appellant bank is a branch not a legal person as envisaged under Sections 50 51 of FERA, 1973 and hence adjudication proceedings and the penalty imposed is a nullity in the eyes of law. (F) For that, neither any act nor any omission is referred to which render the order perse unsustainable. (G). For that, every employee is obliged to duty of care in the task assigned to him and that he is himself responsible for the probable consequences of his acts and towards a degree of foresight and in case such employee in its operation lacks it the employer cannot be made liable for such illegal acts of the employee and that the Adjudicating Authority has not at all focused his attention to this basic issues rendering the order prima facie unsustainable and tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they also could not detect any discrepancy and that the parties have also submitted letters allotting importer-exporter code from DGFT, import licenses issued in their name/transferred in their name at the time of allowing the transactions and the addresses given therein and the addresses in the records maintained at the branch are one and the same. This being so it would be highly improper to suspect or doubt a public document when apparently it did not justify such suspicion. (M). For that, no provision of FERA, 1973 provides or entrust the authority on the officials of Enforcement Directorate empowering them to determine forgery nor can such forgery be proved by statements. Hence, the Adjudication Order, on the exemption of forged import documents, undetermined by the Competent Authority, the conclusion is untenable. (N) For that, most of the transactions mentioned in the SCN were carried out before 31.12.1993, the date when the Exchange Control Manual, 1993 was published. Hence, the order is dictate of non application of mind. (O). For that, non-intentional facilitation does not come within the mischief of abetment. Reliance has been placed in the case of Shri R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ranted. f. the foreign exchange remittances outside was lost to the country irretrievably and g. the banks failed to follow the procedure laid down in Para 78,21 of Chapter 7 of Exchange Control Manual 1993 of the RBI to ensure genuineness of imports and thereby abated the illegal transfer of amounts. (iii). For that, the present case is of very serious nature in which the individuals adopting a specific modus/operandi in connivance in the banks and its offices opened various banks account in different names on the basis of forged and fabricated documents and thereafter transferred huge cash in the said banks account and thereafter with the active connivance with the banks and its officials by submitting forged import documents transferred the money and remitted the amount in foreign currency to various individuals abroad and the Special Director after thorough, examination of the documents seized from the searches of the houses of certain individuals which are also named in the order and also against whom the penalties are imposed and going from the testimony as well as scrutiny of the documents have imposed penalties on the banks its employees and the individuals who wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the order of the Divisions bank of Delhi High Court has been stayed vide its order dated 10.09.2013, copy of which enclosed with the submission. The Adjudicating Authority did consider the issue of cross examination and even issued summons for cross examination in respect of Sanjay Udashi, Shri A.K. Narayn CEO, Mumbai. However, they did not appear before the Adjudicating Authority and the Adjudicating officer refused cross examination by giving details has mentioned in Para-226 of the impugned judgment and summoning of witnesses for cross examination in Para-190 of the impugned judgment. This issue is otherwise left with no consequences in view the stay granted by the Hon ble Supreme Court and not only this the Hon ble Supreme Court in case M/s. Telestar Travels Pvt. Ltd., v/s. Special Director of Directorate of Enforcement JT (2013) 3SC 167 has also dealt with this issue and also denied the right to cross examination. (vii). For that, the issue of delay in pronouncing the order of Adjudication order more than two years is fatal according to the appellant. However, Hon ble Supreme Court in the case of M/s. Telestar Travels Pvt. Ltd., case has examined the issue in details and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dard Chartered Bank Ors. V/s. Directorate of Enforcement and Other, 2005(4 SCC 513) in view, of the findings there is nothing left which could sustained the argument raised by the appellants. Standard Chartered Bank Ors. Vs. Directorate of Enforcement Other AIR 2006 COURT 1301 There does not appear to be any reason to confine the operation of S. 68 only to a prosecution and to exclude its operation from a penalty proceedings under S. 50 of the Act. Since the essential ingredient of both is the contravention of the provisions of the Act. A company is liable to be proceeded against under both the provisions. S. 68 is only a provision indicating who all in addition to company can be proceeded against when the contravention is by a company or who all should or can be roped in, in a contravention is by a company. Section 68 only clarifies the nature and mod of proceedings when the contravention of any of the provisions of the Act is by a company, whether it be by way of adjudication to impose a penalty or by way of prosecution leading to imprisonment or a fine; There does not appear to be any reason to confine the operation of S. 68 of the Act. Merely because the express ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The law is primarily based on the term of the statutes. In the case of absolute liability where the legislature by the clearest intendment establishes an offence where liability arises instantly upon the breach of the statutory offence. It is a case of automatic primary responsibility. Therefore, as regards corporate criminal liability, there is no doubt that a corporation or company could be prosecuted for any offence punishable under law, whether it is coming under the strict liability or under absolute liability. All penal statutes are to be strictly construed in the that the court must see that the thing charged as an offence is within the plain meaning of the words used and must not strain the words on any notion that there has been a slip that the thing is so clearly within the mischief that it must have been intended to be included and would have been included if thought of. All penal provisions like all other statutes are to be fairly construed according to the legislative intent as expressed in the enactment. The distinction between a strict construction and a more free one has disappeared in modern times and now mostly the question is what is true construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly assisted the individuals in perpetuating the illegal activity. Now the questions with regard to the innocence of the bank itself concern his falsified, the period of illegal activities running from 1991 to 1995 during which number of transactions and remittances has taken place the audit of banks are done quarterly and against these transaction bank had received commission how could this be possible that such huge transactions and commissions received by the bank could escape the knowledge of the bank by not questioning that how and in what manner this transaction has taken place and from where the huge commissions have been received this fact itself proof that there was a tacit consent of the banks in perpetuating and allowing this activity for their gain and benefits. The dictionary meaning of abatement is to approved, encourage and support. These fact clearly prove that the banks not only approves these transaction but continued supporting for more than 5 years. Till this fraud was detected the Hon ble Supreme Court in Ranjeet Singh, Bram Singh Sharma v/s State of Maharasthra and Other (2005) 5 SCC 295 has defined the meaning of abatement and establishes that the bank and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment cannot be sustained in view of the express provisions in the statute. The plea with regard to issuance of corrigendum/addendum and the plea of the appellant that only clerical error could be corrected by way of corrigendum/addendum as envisaged u/s. 54 of Para 6 find no strength in view of the provisions of FEMA which came into effect after FERA repealed and u/s 28(2)(f) read with section 16(5) of FEMA clearly gives powers to authority to review its in order. The Hon ble Supreme Court in AIR 2011 Supreme Court 1725 in the case title Thrimailiya Chemical Pvt. Ltd. v/s. Union of India and other have clearly held:- that right of appeal may be a substantive right but the procedure for filing the appeal including the period of limitations cannot be called a substantive right and aggrieved person cannot claim any wasted right claiming that he should be governed by the odd provisions pertaining to period of limitations. Procedural law is retrospective meaning thereby that it will apply even to Act or transactions under the repealed Act. (xi). For that, the plea of the appellant that false documents is contrary to the basic definition of the forgery as it is an admitted cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Appellate Tribunal and that the appellant is prejudiced by such delay. The appellant has relied on the judgments passed by their lordships of Hon ble Supreme Court in the matter of Bhagwandas Fatechand Daswani Ors. v/s. H.P. International Ors. JT 2000 (1) SC 266 and Kanahaiyalal Ors. v/s. Anoop Kumar Ors. JT 2002 (10) SC 98 and the judgment passed by Hon ble High Court, Mumbai in the matter of EMCO Ltd. V/s. Union of India reported in 2014 SCC Online BOM 4962. In the aforesaid judgments their lordships of Hon ble Supreme Court, in the matter of Bhagwandas Fatechand Daswani Ors. v/s. H.P. International Ors. JT 2000 (1) SC 266, have held that:- We, therefore, on this short question, set aside the judgment under appeal without expressing any opinion on the merits of the case and remit the case to the High Court for deciding the appeal afresh, on merits. In view of the fact, that the matter has been pending for a considerable period of time, we request the High Court to decide the matter expeditiously, if possible, within six months. In the aforesaid judgments their lordships of Hon ble Supreme Court in the matter of Kanahaiyalal Ors. v/s. Anoop Kumar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above evidence, which was available before the Adjudicating Authority and also relied upon by the Petitioner at the time of hearing, was not considered in the impugned order, then the same can only be attributed to the delay in passing the order. This delay does appear to have caused prejudice to the Petitioner. This Court in the matter of Shivsagar Veg. Restaurant (Supra) has, after considering the various decisions of the Apex Court, laid down that undue delay (four months) in delivery of judgment by the ITAT after the hearing is in itself sufficient to set aside the impugned order without considering the merits of the order. The Apex Court in the matter of Anil Raj (supra) has reiterated the observations made by an earlier Bench of Apex Court in R.C. Sharma V. Union of India, (1976) 3 SCC 574, which reads as under:- Nevertheless an unreasonable delay between hearing of arguments and delivery of judgment, unless explained by exceptional or extraordinary circumstances, is highly undesirable even when written arguments are submitted. It is not unlikely that some points which the litigant considers important may have escaped notice. But, what is more important is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch illegality or irregularity has been demonstrated. That apart delayed pronouncement of the order by the Adjudicating Authority was not urged as a ground of challenge before the Tribunal or the High Court both of whom have remained silent on this aspect. Even on the question of prejudice we find the contention of Mr. Diwan to be more imaginary than real. The argument regarding prejudice is founded on the plea that the appellants could not place some of the documents which they have now placed before this Court for consideration. It is further admitted that no application for permission to produce these documents was filed by them before the Adjudicating Authority no matter they could have done so if they really indeed needed to place reliance on such documents Mr. Malhotra was, in our view, justified in contending that the hearing had been concluded by the Adjudicating Authority in keeping with the requirement of Section 51 and Rule 3 of the Adjudication Rules under FERA. The first limb of the contention urged by Mr. Diwan, therefore, fails and is hereby rejected. In the judgment passed by Hon ble Supreme Court in the matter of M/s. Telestar (Supra) the fact was also that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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