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TMI Blog2024 (12) TMI 1310X X X X Extracts X X X X X X X X Extracts X X X X ..... Bank, Parliament Street Branch, New Delhi, opened a current account bearing the No. 455620 in its books in the name of a non-resident company, M/s Mapleleaf Trading Company Limited, 111 Claremont Court, Dublin for which the foreign company or the bank did not have requisite statutory or regulatory permission from the Reserve Bank of India (RBI). Further, during the period 08.10.1993 to 22.09.1994, sums to the tune of Rs. 1,46,98,710/- were placed to the credit of the said non-resident company in form of deposits in the said current account, allegedly in contravention of section 9(1)(e) of the Foreign Exchange Regulation Act, 1973. The account opening forms and other bank papers in respect of the said current account were signed and given to the bank by one Sh. Bhadresh B. Gohil on behalf of the company M/s Mapleleaf Trading Company Limited. The said Sh. Bhadresh B. Gohil was introduced to the bank by one P.S. Sabharwal of M/s Technology Parks Limited. Immediately after opening the said current account, Sh. Bhadresh B. Gohil, through a letter dated 09.10.1993 addressed to the bank, authorised one Sh. Laxman Singh to operate the current account singly and requested the bank to withdr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the officer of the bank was recorded by the I.O. of ED in 1996 wherein he admitted the default in not obtaining the requisite KYC documents and permission of RBI to open a Non-Resident account. 8. Ld. Counsel reiterated that reference to the RBI was made by the bank itself. When the notice of proceedings was received from ED, the bank telephonically sought an adjournment informing the Directorate that it will take some time to trace out the relevant records which were old. Subsequently, no intimation of hearing or call notice was received but an ex parte order was passed by the adjudicating authority with various adverse observations about the conduct of the Bank, including negligent attitude, not bothering to reply, paying no heed to almost 12 notices and "outrageous conduct" "beyond tolerance." It is contended by the Ld. Counsel for the appellant that imposition of penalty against the Bank by the ld. adjudicating authority was driven primarily by these adverse observations. 9. It is further contended that before the learned appellate authority, i.e., Special Director (Appeals), the appellant had appeared on one occasion. On that day, the DLA from the respondent directorate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is submitted that M/s Mapleleaf Trading Company Ltd. being a non-resident entity, was not eligible for opening a resident current account without the specific permission of RBI. Further, one Shri Laxman Singh was authorized to operate the account vide letter dated 09.10.1993 by the company. However, no local address of Sh. Laxman Singh was recorded anywhere in the records of the bank which establishes that the account of M/s Mapleleaf Trading Company Ltd. was opened by Allahabad Bank, Parliament Street Branch, by flouting all the relevant rules prescribed by the RBI in this regard. 14. He further pointed to the discussions in the adjudication order passed by the Ld. Dy. Director wherein it is mentioned that a statement of Shri S.K. Bhatia, was recorded in which he inter alia admitted to have opened the account of M/s Mapleleaf Trading Company Ltd. and also stated that he had questioned Sh. G.L. Joshi (Assistant General Manager) and Sh. S.P. Chopra (Manager Advanced) as to how this account can be opened. He further admitted that under the instructions from the seniors he opened the account and did not ask for detailed formalities because he had to attend some other jobs. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver, is that a very harsh view has been taken of what was essentially a technical lapse. There was no mala-fide intention on the part of the Bank, there was no illegitimate gain or contumacious conduct on the part of the Bank. The Bank itself had brought the matter to the notice of RBI when it became aware of the lapse. Furthermore, no proper opportunity was provided to the Bank by either of the authorities below. The respondents, on their part have pointed out that there have been serious lapses on the part of the Bank and furthermore, the Bank did not cooperate in the proceedings conducted by the Authorities below. 18. An issue has also been raised by the Bank regarding the applicability of the Section invoked by the respondents, i.e., Section 9(1)(e). The respondents have not specially addressed this issue in their submissions. 19. In this context, I have perused the provision of Section 9 (1) (e) the erstwhile FERA, 1973 which are as follows: "9. (1) Save as may be provided in and in accordance with any general or special exemption from the provisions of this sub-section which may be granted conditionally or unconditionally by the Reserve Pank, no person in, or resident in, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct any permission or licence has been given or granted to any person subject to any conditions and (i) such person fails to comply with all or any of such conditions; or (ii) any other person abets such person in not complying with all or any of such conditions, then, for the purposes of this Act, (a) in a case referred to in clause (i), such person shall be deemed to have contravened such provision; and (b) in a case referred to in clause (ii), such other person shall be deemed to have abetted the contravention of such provision." From the above provision of the Act, it is evident that it was the appellant Bank which was holding the permission/license under the Act subject to compliance with the foreign exchange law and rules and regulations framed thereunder. The same having been contravened, the appellant bank would be deemed to have contravened such provision. On the other hand, contrary to the submission made by the learned counsel for the appellant, the appellant cannot be said to have 'abetted' the contravention because the allegation of abetment can arise only against a person other than the one who was holding a license or permission. In this case the Bank i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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