Tribunal Upholds Jurisdiction Post-FERA Repeal, Imposes Penalties for Fund Transfers Violating 1973 Act.

The ATFE allowed the revision petition, concluding it had jurisdiction to entertain it post-FERA repeal under FEMA, 1999. The Tribunal dismissed objections regarding the DLA's authorization to file the petition. It found the respondents guilty of contravening Sections 9(1)(b) and 9(1)(d) of FERA, 1973, by receiving and transferring funds on behalf of an NRI. The impugned adjudication order exonerating them was deemed erroneous. Consequently, penalties were imposed: Rs. 1 lakh each on respondents 1 and 3, and Rs. 2 lakhs on respondent 2. The respondents were instructed to deposit penalties within seven days, with enforcement measures applicable upon non-compliance.

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Issues Involved:

1. Jurisdiction of the Appellate Tribunal for Foreign Exchange (ATFE) to entertain revision petitions post-repeal of the Foreign Exchange Regulation Act (FERA), 1973.
2. Authorization of the Deputy Legal Advisor (DLA) to file revision petitions on behalf of the Union of India.
3. Contravention of Sections 9(1)(b) and 9(1)(d) of the FERA, 1973 by the respondents.
4. Validity of the impugned adjudication order exonerating the respondents.
5. Determination of penalties for the contraventions.

Detailed Analysis:

1. Jurisdiction of ATFE:

The Tribunal examined whether it could entertain revision petitions after the repeal of FERA, 1973, and its replacement by the Foreign Exchange Management Act (FEMA), 1999. It was contended that the revisional jurisdiction is statutory and not explicitly transferred to ATFE. However, the Tribunal concluded that Section 49 of FEMA, 1999, implicitly allows for the continuation of pending appeals and revision petitions from the FERA Board to ATFE. It was noted that the repealed Act's provisions are preserved under Section 49(4) of FEMA, 1999, and Section 6(e) of the General Clauses Act, 1897, allowing the continuation of legal proceedings under the repealed statute. Thus, the Tribunal held that it could exercise revisional powers to maintain the purity of justice.

2. Authorization of the Deputy Legal Advisor:

The Tribunal considered the objection regarding the authorization of Shri T.K. Gadoo, DLA, to file the revision petitions. It was argued that he was not authorized to file any revision or appeal on behalf of the Union of India. However, the Tribunal noted that Shri T.K. Gadoo, DLA, regularly presented arguments on behalf of the Directorate of Enforcement and was authorized under Article 77 of the Constitution of India to file the revision petition. Therefore, the objection was dismissed.

3. Contravention of Sections 9(1)(b) and 9(1)(d) of FERA, 1973:

The respondents were charged with receiving money on behalf of an NRI and handing it over to another individual who purchased foreign currency. The Tribunal found that the respondents admitted to receiving two NRF drafts of Rs. 1,25,000 each and paying a total amount of Rs. 2,81,628, including a 10% commission, to respondent No. 2. The Tribunal held that this transaction violated Sections 9(1)(b) and 9(1)(d) of FERA, 1973, as it involved receiving money on behalf of a non-resident and making payments in lieu thereof.

4. Validity of the Impugned Adjudication Order:

The Tribunal scrutinized the impugned adjudication order that exonerated the respondents despite the evidence of contravention. It emphasized that circumstantial evidence could be sufficient to establish the case, referencing the Supreme Court's judgment in Trimukh Maroti Kirkan v. State of Maharashtra, which upheld convictions based on circumstantial evidence. The Tribunal concluded that the adjudication order contained serious errors and wrongly exonerated the respondents.

5. Determination of Penalties:

Upon finding the respondents guilty of contraventions, the Tribunal decided to impose penalties. It noted that remanding the matter back to the adjudicating officer would prolong litigation unnecessarily. Therefore, the Tribunal imposed a penalty of Rs. 1 lakh each on respondents 1 and 3 and Rs. 2 lakhs on respondent 2, considering the gravity of their actions and their roles in the violations.

Conclusion:

The revision petition was allowed, and penalties were imposed on the respondents for contraventions of Sections 9(1)(b) and 9(1)(d) of FERA, 1973. The respondents were directed to deposit the penalties within seven days, failing which the Enforcement Directorate could recover the amounts in accordance with the law.

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