1992 (2) TMI 190 - HC - FEMA

Appellate Court Upholds Order, Modifies Confiscation & Fine

UNION OF INDIA Versus MOHIBALI ROSHANALI NASER

The appellate court upheld the adjudication order dated 20th June 1988, except for the confiscation of Rs. 17,00,057/- and the imposition of a fine of Rs. ... Confiscation and penalty Issues Involved:1. Validity of the order dated 8th September 1986 under Section 33(2) of the FERA Act.2. Validity of the adjudication order dated 20th June 1988.3. Confiscation of Rs. 17,00,057/- and imposition of penalty of Rs. 60,000/- on the petitioners.4. Imposition of 12% interest per annum by the learned Single Judge.Issue-wise Detailed Analysis:1. Validity of the order dated 8th September 1986 under Section 33(2) of the FERA Act:The learned Single Judge found that the order dated 8th September 1986 was not sustainable as Section 33(2) did not empower the Department to confiscate the amount of Rs. 17,00,057/-. The order was not addressed to the petitioners, violating the rules of natural justice since no show cause notice was issued to the petitioners. Section 33(2) was only meant to obtain information regarding books and documents, and the impugned order virtually amounted to confiscation, making it bad in law. The judgment quashed the order dated 8th September 1986.2. Validity of the adjudication order dated 20th June 1988:The learned Single Judge observed that the petitioners could not be held liable under Section 49 of the FERA Act for aiding or abetting the Bank's contravention. The only fault was that FTS forms and A2 forms were not signed by the passengers themselves but by the petitioners' employees. There was no evidence that the foreign exchange obtained had not gone to bona fide purchasers or that the amount had been misappropriated. The signing of forms by the passengers was considered an inconsequential formality as the forms permitted the signatures of the Head of the family or the leader of the group.3. Confiscation of Rs. 17,00,057/- and imposition of penalty of Rs. 60,000/- on the petitioners:The appellate court agreed with the learned Single Judge that the petitioners could not be held guilty of aiding or abetting the contravention of the FERA Act by the Bank. The evidence indicated irregularity or a breach but not contravention. The confiscation of Rs. 17,00,057/- and the imposition of a penalty of Rs. 60,000/- were not legal and justified. The appellate court set aside the confiscation and penalty imposed on the petitioners.4. Imposition of 12% interest per annum by the learned Single Judge:The appellate court found that the learned Single Judge erred in imposing 12% interest per annum on the Department. The technical breach of rules established by the Department did not warrant such interest. The appellate court set aside the interest imposed on the Department.Conclusion:The appellate court upheld the order of adjudication dated 20th June 1988, except for the confiscation of Rs. 17,00,057/- and the imposition of a fine of Rs. 60,000/- on the petitioners. The rest of the adjudication order was confirmed. The interest at 12% per annum imposed by the learned Single Judge was also set aside. The appeal was partly allowed, and there was no order as to costs.