TaxTMI 
TaxTMI 
1996 (1) TMI 351
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....Directorate of Enforcement. The first charge related to their failure to repatriate foreign exchange of Malaysian GBP 62,186.42 being the sale proceeds of Nataraja Rubber Estate and Malaysian 1,25,000, being the social welfare prize money won by the company in 1960 whether second charge related to -their failure to repatriate Malaysian GBP 3,56,223-44 being the profit earned by the company from the business carried job by the branch of the respondent company at Kuala Lumpur as per the statement of profit and loss to the company ending on December 51, 1872. Ail the amounts admittedly belonged to the company and had been disclosed by the company in its balance-sheet as well as in the return of income-tax for the relevant years. Admittedly, the respondents had not obtained any special or general permission from the Reserve Bank of India authorising them to hold the aforesaid foreign exchange lying with their branch at Kuala Lumpur in Malaysia without repatriating the' same to India. The Directorate of Enforcement in the departmental proceedings, taken against the respondents, by its order dated September 19, 1977, held the respon dents guilty of committing both the contraventions ment....
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....nk of India was contravened, no penalty could be imposed for breach of section 10(1)(a) under section 23(1)(a) of, the FERA, 1947. The High Court also held that a finding regarding existence of "mens rea or criminal intent" for failure to repatriate foreign exchange was necessary before the respondents could be penalised for contravention of the provisions of section 10(1)(a) of the FERA, 1947, and since in the instant case, the existence of mens rea had not been found by the Directorate or the Appellate Board, the award of punishment by way, of levy of penalty under section 23(1)(a) of the FERA, 1947, was not justified. This appeal by special leave has, been filed by the Directorate of Enforcement, questioning the correctness of the order of the High Court. Principally, there are two questions which require our consideration in this appeal: (1) Whether existence of "mens rea" is a necessary ingredient for establishing contravention of section 10 punishable under section 23 of the FERA, 1947, and (2) whether section 10(1) of the FERA, 1947, is not an independent provision making its contravention, by itself punishable under section 23(1)(a) of the FERA, 1947, or whether its cont....
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....nd for proper utilisation thereof. The Act is designed to safeguard and conserve foreign exchange, which is essential for the economic life of a developing country like India. Conservation of foreign exchange resources of the country being the inoperative need, it follows that any action, positive or negative, which disables this country from utilising the foreign exchange to which it has a right, to sub-serve the common good, would be volatile of the relevant provisions of the FERA, 1947, punishable under section 23(1)(a) of the FERA, 1947, which provision lays down one of the modes of punishment for the contravention of the provisions of various sections enumerated therein, including section 10, or of any rule, direction or order made thereunder. It is in this background, that we shall address ourselves to answer the two questions (supra) . The High Court, while dealing with the first question opined that section 23 is a "penal provision" and, the proceedings under section 23(1)(a) are "quasi-criminal" in nature and, therefore, unless. "criminality" is established, the penalty provided under section 23(1)(a) of the Act cannot be imposed on any person. The High Court thus held ....
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....dicating authority under the Act is not that of conviction but of determination of the breach of the civil obligation by the offender. It is thus the breach of a "civil obligation" which attracts "penalty" under section 23(1)(a) of the FERA, 1947, and a finding that the delinquent has contravened the provisions bf section 10 of the FERA, 1947, would immediately attract the levy of "penalty" under section 23, irrespective of the fact whether the contravention was made by the, defaulter with any "guilty intention" or not. Therefore, unlike in a criminal case, where it is essential for the "prosecution" to establish that the "accused" had the necessary guilty intention or in other words the requisite "mens rea" to commit the alleged offence with which he is charged before recording his conviction, the obligation on the part of the Directorate of Enforcement, in cases of contravention of the provisions of section 10 of the FERA, would be discharged where it is shown that the "blameworthy conduct" of the delinquent had been established by wilful contravention by him bf the provisions of section 10 of the FERA, 1947. it is the delinquency of the defaulter itself which establishes his ....
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....r the Sea Customs Act during the confiscation proceedings, he was being punished twice for the some offence which was not permissible in law in view of article 20(2) of the Constitution. The High Court was of the opinion that the appellant could claim the protection of article 20(2) only if he was the owner of the gold which had been confiscated. The Chief Presidency Magistrate was, therefore, directed to first determine that question of fact. After recording some "evidence, the Chief Presidency Magistrate returned a finding that the appellant was the owner of gold. The High Court, however, reversed the finding and sent the case back to the trial court for its trial in accordance with law after refusing the benefit to the appellant of the protection under article 20(2) of the Constitution. By special leave the appellant filed an appeal in this court. It was in this background that the Constitution Bench proceeded to determine whether the appellant could be said to have been prosecuted when proceedings for confiscation were taken by the sea customs authorities for, if it was found that the appellant had been prosecuted when proceedings were taken by the sea customs authorities to co....
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....toms Act do not constitute a judgment or order of a court or judicial tribunal necessary for the purpose of supporting a plea of double jeopardy. It, therefore, follows that when the customs authorities confiscated the gold in question neither the proceedings taken before the sea customs authorities constituted a prosecution of the appellant nor did the order of confiscation constitute a punishment inflicted by a court or judicial tribunal on the appellant. The appellant could not be said by reason of these proceedings before the sea customs authorities to have been 'prosecuted and punished' for the same offence with which he was charged before the Chief Presidency Magistrate, Bombay, in the complaint which was filed against him under section 23 of the Foreign Exchange Regulation Act," The Constitution Bench then laid down that though the administrative authorities functioning under the Sea Customs Act had the jurisdiction to confiscate gold illegally brought into the country, and levy penalty on the defaulter, none the less the "authorities were not trying a criminal case but deciding only the effect of a breach of the obligations by the defaulter under the Act. On a parity ....
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....ovisions of section 10(1)(a) of the FERA, 1947, or could it be said that unless the respondents had violated a direction given under section 10(2), the "offence" under section 10(1)(a) could not be said to have been committed, attracting the levy of penalty under section 23(1)(a) of the FERA, 1947? This precisely is the core of the second question framed by us above. The scheme of clause (1) of section 10 in, our opinion, unambiguously indicates that any person who has a right to* receive in foreign exchange or its payment in rupees in India shall not do or refrain from doing anything nor take or refrain from taking any action, which has the effect of either delaying or making the receipt of the whole or part of that foreign exchange or its payment in rupees totally cease except where heis expressly or by some general direction authorised or permitted by the Reserve Bank of India to do so. The default is complete on the failure to get the foreign exchange, receivable in India, repatriated, within a reason able time after the right to receive the same accrues. what is' "reasonable . time?' would depend upon the facts and circumstances, of each ease and it is neither possible nor ....
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....ons under sub-section (2) of section 10. The obligation to repatriate the foreign exchange, receivable in India, is a statutory; obligation and is not dependent upon any specific direction to be issued-by the Reserve Bank of India in that behalf under sub-section (2) of section 10. The object of enactment of clause (2) of section 10 appears to be that the defaulter, may after having been penalised for' contravention of section 10(1) be still directed to repatriate the foreign exchange, in whole or in part, by the Reserve Bank of India and his failure to "comply With those directions by itself would also invite penalty under section 23(1)(a) of the Act notwithstanding the imposition of penalty upon him for the breach of section 10(1)(a) of the FERA, 1947. Notwithstanding the imposition of penalty under sub-section (1) of section 10, the Reserve Bank of India retains the authority to issue directions for repatriation, etc., of the foreign exchange held by the defaulter abroad as the power to regulate dealings in foreign exchange do not get extinguished by imposition of some. penalty on the defaulter during adjudieatdry proceedings. Section 23 of the FERA, 1947, prescribes penaltie....