1992 (6) TMI 189 - AT - FEMA

Tribunal Upholds Penalties for Unauthorized Foreign Security Holdings and Exchange Violations under FERA 1973.

Dr. Rajaram Sriram Versus Director of Enforcement

The Appellate Tribunal for Foreign Exchange dismissed the appeals in interconnected cases concerning penalties under the Foreign Exchange Regulation Act, ... - Issues:1. Adjudication of penalties for contravention of Foreign Exchange Regulation Act, 1973.2. Violation of sections 19(1)(e) and 14 of the Act.3. Applicability of legal principles and Supreme Court observations.4. Imposition of penalties and legal residency status of the appellants.Analysis:The judgment by the Appellate Tribunal for Foreign Exchange dealt with Appeal Nos. 378 and 379 of 1986, which were inter-connected cases concerning penalties imposed for contravening the Foreign Exchange Regulation Act, 1973. The penalties arose from violations of sections 19(1)(e) and 14 of the Act. The appellants, Dr. Rajaram Sriram and Smt. Vidya Rajaram, were penalized for holding foreign securities without permission and failing to offer foreign exchange for sale within the prescribed time limits. The adjudication order found the appellants guilty and imposed various penalties based on the violations outlined in show-cause notices.The main grounds of appeal challenged the residency status of the appellants and the excessive nature of the penalties. The appellants argued that they were not Indian residents and thus not subject to the Act's provisions. However, the Adjudicating Officer found them guilty as they were subject to Indian laws during their stay in the country. The Tribunal noted that the appellants were Indian citizens and had resided in India, making them liable under the Act. The penalties imposed were deemed appropriate considering the contraventions and the amounts involved.Regarding the applicability of legal principles, the Tribunal rejected the appellants' argument that they were not residents in India, citing their citizenship and residency during the relevant period. The judgment emphasized that non-compliance with Indian laws by the appellants, despite being residents, warranted penalties. The penalties were upheld as not disproportionate given the violations. The Tribunal confirmed the adjudication order, dismissing the appeals and affirming the penalties imposed on the appellants for contravening the Act.