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TMI Blog2009 (6) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... sation of pre-deposit of penalty allowed by order dated 14-2-2005, the first appellant to furnish unconditional bank guarantee of the amount of penalty. The first appellant has complied with the pre-deposit order dated 14-2-2005. Presently, we take up the Appeal No. 987/2004 along with other connected appeal No. 1109/2004, but after granting dispensation of pre-deposit of penalty to second appellant, due to the fact that both are connected appeals, for further decision. 2. Learned counsel Shri Rajiv Virmani argued that the deposits were made on different dates in 1993 but show-cause notice is issued in March, 2002, after a considerable delay. The appellant-bank, after a period of 8 years, is not supposed or allowed to keep the old records which they have to destroy as per the provisions of Banking Regulations Act, 1949, and Rules framed thereunder. Though appellant-bank has deposited different amounts on 9 occasions of foreign currency in cash after duly following the instructions issued by RBI but they cannot be asked to produce CDFs at this belated stage which are not preserved and maintained after expiry of 8 years. Moreover, production of CDFs is not obligatory if the differen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elieve that any such contravention or evasion as aforesaid is contemplated by the person report the matter to the Reserve Bank". 4. On facts, the appellant-bank has deposited in self-opened NRE account of another appellant, the following amounts of foreign currency- Sl. Date Amount in US dollars 1. 24-1-1992 10,000 2. 1-2-1992 2,500 3. 27-1-1992 10,000 4. 31-1-1992 10,000 5. 28-1-1992 10,000 6. 30-1-1992 10,000 7. 25-1-1992 300 8. 25-1-1992 10,000 9. 31-1-1992 10,000 From above, it is clear that second appellant deposited total amount of US dollars 72,800 on 9 different occasions starting from 24-1-1992, till 1-2-1992. This fact should have being glare, put the appellant-bank on query as reasonable person who is having an authorization from RBI to deal with foreign currency. 5. Thus, the appellant-bank has failed to conduct its business with good faith, i.e., without due care and retention which is sinequanon of every permission or licence under the statute. The words to the effect that licensee shall act reasonably so as not to lead to contravention of statute are found incorporated in section 6(5) which by themselves create a d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the background against which the legislation was enacted." 7. Therefore, the appellant-bank after taking the authorization under section 6, where sub-sections (4) and (5) cast a legal duty for compliance, cannot play hide and seek and say that section 6(4) and (5) does not cast a duty on appellant-bank to act cautiously as a reasonable man should do while making deposits of foreign currency. The defalcation by a fraudster is required to be detected and curbed as per the standard envisaged for a reasonable person. The foreign currency reserve of the country cannot be lost in the way a fraudster manages and manipulates to cause harm without active role played by an authorized dealer to catch the defalcation. 8. Though authorization under section 6 to the appellants is still available and renewed from time-to-time, as argued by learned counsels, but this fact by itself cannot wipe out the contravention, if any of the provisions of the statute. The RBI enjoys grant of power by the Parliament to permit authorization or licence who can also revoke the authorization either under general power as a commitment of grant under General Clauses Act or under the specific power available unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 49(3) of Foreign Exchange Management Act, 1999, state that "no Court shall take cognizance of an offence under the repealed Act and no adjudicating officer shall take notice of any contravention under section 51 of the repealed Act after the expiry of a period of two years from the date of commencement of this Act". As the language clearly states about the taking notice of by adjudicating officer and does not say anything about service of show-cause notice so this argument advanced by ld. counsel contains no substance. The words 'take notice of' cannot be expanded to mean making service of the show-cause notice. Law on this aspect is quite clear and this Tribunal cannot recast the legislative enactment as held in Nasiruddin v. Sita Ram Agarwal [2003] 2 SCC 577. 12. In CREF Finance Ltd. v. Shree Shanthi Homes (P.) Ltd. JT 2005 (8) SC 87, the conceptual meaning of the words "taking cognizance of" is discussed where complaint under section 138 of the Negotiable Instruments Act, 1881 was filed before 14th Additional Chief Judicial Magistrate who on the date of filing wrote; "presented on 19-4-2000. Cognizance taken . . . . Register and put up on 1-6-2000". The questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain a mandatory obligation by the nature of legal duty shall also throw light in construction of a statutory scheme; whether duty casted upon is mandatory or directory. In these appeals, the appellant-bank is represented by counsel of caliber where asking the adjudication officer to engage himself in empty formality will be too much. Therefore, after substantive compliance of rule 3, the other details enshrined therein can at best be termed as directory. Hon'ble Supreme Court in Rasiklal v. Kishore 2009 (3) SCALE 9 while dealing with the concept of violation of principles of natural justice by not giving a notice to the complainant before grant of bail in a bailable offence to the accused held that argument of complainant of violation of principles of natural justice will not held because principles of natural justice is otherwise not a mantra to be applied in vacuum in all cases but depends on facts and circumstances of each case. It is legally well-settled that compliance of principles of natural justice is not to be emphasized whenever empty formality is the outcome. (Ref. State Bank of Patiala v. S.K. Sharma [1996] 3 SCC 364; and (2) Karnataka State Road Transport Corpn. v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to act with care and caution while handling foreign currency even when making deposit in NRE account. Though there is no general standard of care and caution applicable to all persons. Under the circumstances and more so when the appellant-bank is an authorized dealer under the terms of licence granted by RBI, a high standard of care and caution is needed from it. 18. On the standard of care and caution, Bombay High Court in Emperor v. Abdool Wadood Ahmed [1907] ILR 31 Bom. 293 observed as follows :- "The standard of care and caution must be judged according to the capacity and intelligence of the person whose conduct is in question. It is only to be expected that the honest conclusion of a calm and philosophical mind may differ very largely from the honest conclusions of a person excited by sectarian zeal and untrained to the habits of reasoning. The question of good faith must be considered with reference to the position of the accused and the circumstances under which he acts . . . . The law does not expect the same standard of care and attention from all persons regardless of the position they occupy. What is due care and attention depends on the position in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , has not defined the word 'abetment', so we are required to go to the definition contained in Indian Penal Code where section 107 has stated as under :- "107. Abetment of a thing.-A person abets the doing of a thing, who- First.-Instigates any person to do that thing; or Secondly.-Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy, and in order to the doing of that thing; or Thirdly.-Intentionally aids, by any act or illegal omission, the doing of that thing. Explanation 1.-A person who, by wilful misrepresentation, or by wilful concealment of a material fact which he is bound to disclose, voluntarily causes or procures, or attempts to cause or procure, a thing to be done, is said to instigate the doing of that thing. Illustration A, a public officer, is authorized by a warrant from a Court of Justice to apprehend Z. B, knowing that fact and also that C is not Z, wilfully represents to A that C is Z, and thereby intentionally causes A to apprehend C. Here B abets by instigation the apprehension of C. Explanation 2.-Whoever, either prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oreign currency in India. The burden under section 71, FER Act, 1973, lies on him. Moreover, the factum of bringing foreign currency into India through CDF is within his special knowledge. This fact also casts a burden on second appellant to prove by logical evidence, i.e., production of CDF, that he has brought foreign currency in India in a lawful manner. As the burden under section 106, Indian Evidence Act, 1882, has not been discharged so he has been correctly held guilty and the impugned order cannot be termed as bad in law. Nor the impugned order contains any other error so is required to be affirmed. This Appeal No. 1109/2004 contains no merit so is required to be dismissed. 26. Therefore, these appeals do not contain any merit and are required to be dismissed. The appellant-bank has not performed the expected duty of due care and attention while making 9 different deposits in NRE account of same person on overlapping dates within a short period of 9 days. There is no other error pointed out in the impugned order which is required to be affirmed. 27. For the reasons stated hereinabove, these appeals are dismissed having no merits. The impugned order is sustained and mainta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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