2008 (12) TMI 848 - AT - FEMA

ATFE Upholds ED's Revision Petitions; Quashes Prior Order, Demands New Adjudication on Clearing Agents' Roles.

Directorate of Enforcement Versus M.D. Ruparel & Sons

Directorate of Enforcement Versus M.D. Ruparel & Sons - TMI Issues Involved:1. Legality of the adjudication order passed by the Special Director, Enforcement Directorate.2. Maintainability of the revision petitions filed by the Enforcement Directorate.3. Jurisdiction of the Appellate Tribunal for Foreign Exchange (ATFE) to entertain revision petitions after the repeal of the Foreign Exchange Regulation Act, 1973 (FERA).4. Authorization of Dr. Shamsuddin, DLA, to file the revision petitions.5. Delay in filing the revision petitions.6. Examination of the evidence and the role of respondents as clearing agents in the alleged contravention.Detailed Analysis:1. Legality of the Adjudication Order:The Enforcement Directorate challenged the Adjudication Order No. ADJ/90 to 96/B/SDE/PKA/2000 dated 11th May, 2000, which dropped allegations of contravention of Sections 8(3), 8(4), 64(2), 9(1)(b), 9(1)(d), and 8(1) read with Section 9(1)(f)(i) of the FER Act, 1973, against the respondents. The respondents were alleged to have worked as clearing agents for over-invoiced imported books managed by Naresh T. Mehra. Despite the admissional statement of respondent Mahendra M. Ruparel, the adjudicating officer exonerated the respondents without proper consideration of their involvement.2. Maintainability of the Revision Petitions:The Tribunal addressed the maintainability of the revision petitions filed by the Enforcement Directorate under Section 52(4) of the FER Act, 1973. The Tribunal concluded that the revision petitions are maintainable even after the repeal of the FER Act, 1973, by the Foreign Exchange Management Act, 1999 (FEM Act, 1999). The Tribunal emphasized that the provisions of the repealed Act are saved by Section 49(4) of the FEM Act, 1999, and the remedy under the old Act remains available.3. Jurisdiction of the ATFE:The Tribunal examined whether it had jurisdiction to entertain revision petitions after the dissolution of the FERA Board. It concluded that the ATFE, as the successor to the FERA Board, has the jurisdiction to entertain revision petitions under Section 52(4) of the FER Act, 1973. The Tribunal held that the legislative scheme and the provisions of the General Clauses Act, 1897, support the continuation of legal proceedings under the repealed Act.4. Authorization of Dr. Shamsuddin, DLA:The Tribunal scrutinized the authorization of Dr. Shamsuddin, DLA, to file the revision petitions. The Tribunal noted that the Directorate of Enforcement is not a corporate body, and the revision petitions were not filed by the adjudicating officer involved in passing the impugned order. The Tribunal accepted that Dr. Shamsuddin, DLA, who presented arguments on behalf of the Directorate, was authorized to file the revision petitions.5. Delay in Filing the Revision Petitions:The Tribunal addressed the issue of delay in filing the revision petitions, which were filed 1 year, 3 months, and 25 days after the adjudication order. The Tribunal emphasized that while Section 52(4) does not prescribe a limitation period, revision petitions should be filed within a reasonable period. The Tribunal referred to the judgment in E.S.I. Corporation v. C.C. Santhakumar, which highlighted that reasonable time depends on the factual circumstances of each case. The Tribunal found no satisfactory explanation for the delay but held that the revision petitions are maintainable as there was no proof of waiver or acquiescence.6. Examination of Evidence and Role of Respondents:The Tribunal noted that the adjudication order lacked a proper discussion on the role of the respondents as clearing agents in the alleged contravention. The Tribunal emphasized that abetment could be committed through intentional aiding, instigating, or engaging in conspiracy, even as a commission agent. The Tribunal referred to the Supreme Court's observations in Collector of Customs, Madras v. D. Bhoormull, which highlighted the burden of proof in quasi-criminal proceedings. The Tribunal found that the adjudication order only discussed the low commission received by the respondents and did not adequately consider their association with Naresh T. Mehra.Conclusion:The Tribunal held that the revision petitions are maintainable and quashed the impugned adjudication order concerning the two respondents. The matter was remanded for fresh adjudication by the Adjudicating Officer, who was directed to consider the evidence in detail and decide the matter within four months from 22nd January, 2009.