TaxTMI 
TaxTMI 
2009 (4) TMI 455
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....-2001 in Appeal Nos. 263 and 574 of 2000 of the Appellate Tribunal for Foreign Exchange along with the interest at 18 per cent per annum from the date of the seizure to the date of payment to the Petitioner and also to pay the value of the Foreign Currencies which have become invalid due to the failure of the 3rd Respondent to encash and deposit in a bank immediately on their seizure. 3. W.P. No. 23745 of 2001 has been filed by A. Michael, the Respondent in C.M.A. No. 205 of 2002 praying for a issue of Writ of Mandamus to direct the Respondent therein to file a complaint in writing under section 56 of the Foreign Exchange Regulation Act, 1973, (hereinafter referred to as FERA), at the appropriate Court at Chennai prosecuting the officials responsible for the contravention of the provisions of section 57 of FERA, on account of their failure to comply with the orders and directions contained in the order of adjudication dated 7-1-2000 and the order in appeal dated 18-7-2001. 4. C.M.A. Nos. 205 of 2002 and 206 of 2002 have been filed by the Union of India represented by the Director of Enforcement, New Delhi against the order passed by the Appellate Tribunal for Foreign Exchange....
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....the appeal filed by the respondents. Against that, the Director of Enforcement filed the appeal claiming himself to be aggrieved. Even at the initial stage, preliminary objections were raised regarding the maintainability of such an appeal and, therefore, the Director of Enforcement filed a miscellaneous petition to amend the cause title by substituting the name of the appellant as Government of India represented by the Director of Enforcement. A learned single Judge of this Court rejected the amendment petition on the ground that though it appears to be an innocuous one, the prayer in the miscellaneous petition really amounts to substitution of a new appellant in the place of the original appellant. It was observed that when the grounds of appeal showed the Director of Enforcement as the appellant, it is not open either to the Director of Enforcement or to the Government of India to say that the appeal is filed by the Government of India and, therefore, the amendment petition was dismissed. On the question of maintainability, the learned single Judge held that unless the statute authorised the Director of Enforcement to file an appeal, he cannot do so. The learned single Judge ref....
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.... even if the adjudicating authority is the Director of Enforcement, when he institutes or defends any appeal under section 54, he will be acting only as an administrative head of the Director of Enforcement and is fully empowered to defend or institute an appeal. The Notification dated 16-2-2002 is issued by the Ministry of Home Affairs, viz., the Authentication Orders and Other Instruments Rules, 2002. It is seen here that with regard to the Department of Revenue, Ministry of Finance, the officers who may authenticate the orders and other instruments are the Special Directors/Additional Director/Deputy Director/Deputy Legal Adviser. On 8-11-2001, there is a letter from the Enforcement Directorate which is addressed to the Deputy Director, Enforcement Directorate in New Delhi, which is to the following effect : "It has been decided to file an appeal against the order dated 18-7-2001 with regard to A. Michael and M. Soosai." 11. A. Michael and M. Soosai are the respondents in the present appeals. The Director was also requested to file an application for condonation of delay. On 20-11-2001, a letter is addressed from the Enforcement Directorate at New Delhi to the Deputy Direc....
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....tions of Services Rules has to be construed in the wider sense. He also referred to a judgment of P. Sathasivam, J. (as he then was) sitting singly in Application No. 177 of 2001 in Insolvency Notice No. 39 of 2001, where the same question was raised as to whether the proceedings initiated by the Deputy Director can be said to be done by the Government of India and reliance was placed again on Rama Arangannal's case (supra). It was brought to the notice of the Court then that the Directorate of Enforcement is an ex officio Additional Secretary to the Government of India and reference was made to Pradeep Kumar Biswas v. Indian Institute of Chemical Biology [2002] 5 SCC 111, where the Supreme Court explained that what is meant to be ex officio appointment. The learned Judge also referred to V.S. Mallimath's case (supra), wherein it was held that the expression 'Government of India' includes all the officers functioning under the three wings and, therefore, it was held that the Deputy Director, Enforcement Directorate is an officer of the Government of India coming under the Department of Revenue, Ministry of Finance and is not independent of the Government of India; he is an Officer ....
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....ion raised was that the complaint under section 138 of the Negotiable Instruments Act, 1983 was not maintainable since it was not the proper officer who had initiated the proceedings and that the complaint could only be filed by a person who is in charge or the responsibility of the Government and that a subsequent authorisation would not validate the complaint. The Supreme Court held that in that case, the eligibility criteria prescribed by section 142 is that the complaint must be by the payee or the holder in due course and that the said criteria was satisfied as soon as the complaint was in the name and on behalf of the appellant-company. If we adopt the same analogy to this case, the appeals are filed only by the Union of India represented by the officer, who according to us, as per the records produced by the learned Special Counsel, is a person authorised in this behalf. Therefore, the preliminary objection is rejected. 14. Now, we shall proceed to discuss the facts of this case. On 10-6-1997, the Officers of the Enforcement Directorate, Chennai apprehended one A. Balasubramanian alias Balu and M. Soosai, Manager and Cashier, respectively of the International Money Exchan....
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....ietor of IMEC and Mr. M. Soosai, Cashier, IMEC are established beyond reasonable doubt and they are guilty of the charges, and proceeded to impose penalty of Rs. 5,000 for contravention of section 7, read with sections 6(4), 6(5) and section 49 of FERA, Rs. 50,000 for contravention of section 8(1) for otherwise transferring the travellers cheques and Foreign Currencies to M. Soosai. Further, the Adjudicating Authority ordered confiscation of the seized travellers cheques in terms of section 63 of the Act. Mr. M. Soosai was imposed with the penalty of Rs. 30,000 under section 8(1) of the Act and Rs. 15,000 under section 8(1), read with section 64(2) of the Act. The seized Foreign Currencies of US$ 10,000 and assorted Foreign Currencies were ordered to be released with a direction to encash the same with a Bank authorized to deal with the same. The charges framed against M/s. IMEC and A. Balasubramanian, Manager were dropped. 17. Aggrieved by the order of the Adjudication, A. Michael and M. Soosai preferred appeals before the Appellate Tribunal for Foreign Exchange, New Delhi. The Tribunal by a common order dated 18-7-2001 allowed the Appeals and set aside the order of the Adjudic....
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....llate Tribunal that there was no violation of section 7, read with sections 6(4), 6(5), 49 and 8(1), of FERA, 1973 is in order ? 10. Whether the presumption available under section 59, read with section 71, of FERA, 1973 will squarely apply to the facts and circumstances of the case on hand and not applying such presumption by the learned Appellate Tribunal would tantamount to erroneous findings in law ? 11. Whether the findings and conclusions of the Appellate Tribunal are in accordance with Foreign Exchange Regulation Act and the FLM Instructions ? 19. The show-cause notice extracts sections 7, 6(4), 6(5), 8(1) and 64(2) of the Foreign Exchange Regulation Act and also wanted the respondents to show cause as to why adjudication proceedings shall not be initiated against them for contravention of the above sections and why the foreign exchange shall not be confiscated. To put it in brief, the International Money Exchange Corporation and A. Michael, the respondent in C.M.A. No. 205 of 2002 were alleged to have contravened section 7, read with section 6(4) and 6(5), of the Act for not complying with the condition subject to which the full-fledged money-changers license was g....
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....sed by M/s. IMEC under proper vouchers by authorized dealers and these were also produced and that is why the Tribunal had accepted the case of the respondents. 21. As regards the travellers cheques, it was submitted that if a customer presents a travellers cheque that has already been countersigned, the acceptor, while taking it, should ask that person to once again sign the travellers cheque on the reverse and get the two signatures compared by folding the cheque over and satisfy himself about the truth of the signature. Learned senior counsel submitted that if this is so, it is incorrect to state that the travellers cheque could be encashed by anyone anywhere. It was also submitted that the show cause memo merely extracts all the sections without specifically putting on notice the exact nature of contravention. 22. Learned Special Counsel appearing for the appellants submitted that it was on specific information that was received that the seizure was effected. There was nothing to show that Dass India Colour Lab had asked for any money from the respondents and, therefore, the case that M. Soosai and Balasubramanian were proceeding with the foreign exchange in their possess....
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....the memorandum of instructions. As far as travellers cheques are concerned, all travellers cheques purchased by the licenced money changer should be sold to an authorized dealer in foreign exchange immediately, i.e., on the next day. Monthly statements should be given in respect of all transactions. 26. As far as the Memorandum of Instructions to Full-Fledged Money Changers is concerned, there are two categories of money-changers, one is full-fledged and the other is restricted. Full-fledged money-changers are those firms or individuals who are authorized to undertake by them purchase and sale transactions with the public. Restricted money-chan-gers are those shops, hotels, etc., which have been authorized to purchase foreign currency towards costs of goods supplied by them. In respect of Authorized Officials, it is stipulated that all money-changers should arrange to forward a list giving full names and designations of their representatives who are authorised to buy and sell foreign currency notes, coins and travellers cheques on their behalf together with their specimen signatures, at the end of each year to the office of Reserve Bank under whose jurisdiction they are function....
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....he Supreme Court held as follows : "4. The pre-condition to attract section 4(1) would be 'buy or otherwise acquiring or borrowing from or sell or otherwise transfer or lend to or exchange with any person not being an authorised dealer, any foreign exchange'. From the fact that some foreign exchange was recovered from the car belonging to the respondent, the only provision which may possible get attracted is whether the respondent can be said to have 'otherwise acquired', inasmuch as all other expressions in sub-section (1) of section 4 are totally absent. The expression 'acquire' must have a definite connotation and it must indicate something more than mere possession. There is not an iota of material to indicate even that the respondent knew what the packet contained when it was delivered to him or when the packet was recovered from the car being intercepted. He has taken a plea that it was handed over to him at Bombay to be carried to Kasaragod and somebody would come to take it from him at Kasaragod. Such a plea, on the face of it, cannot be rejected ipso facto." The case in hand is even better. The employees of IMEC and as the authorized representative whose signatures h....
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....nstitutes an 'attempt' is a mixed question of law and fact, depending largely on the circumstances of the particular case. 'Attempt' defines a precise and exact definition. Broadly speaking, all crimes which consist of the commission of affirmative acts are preceded by some covert or overt conduct which may be divided into three stages. The first stage exists when the culprit first entertains the idea or intention to commit an offence. In the second stage, he makes preparations to commit it. The third stage is reached when the culprit takes deliberate overt steps to commit the offence. Such overt act or step in order to be 'criminal' need not be the penultimate act towards the commission of the offence. It is sufficient if such act or acts were deliberately done, and manifest a clear intention to commit the offence aimed, being reasonably proximate to the consummation of the offence. As pointed out in Abhayanand Mishra v. State of Bihar [1962] 2 SCR 241, there is a distinction between 'preparation' and 'attempt'. Attempt begins where preparation ends. In sum, a person commits the offence of 'attempt to commit a particular offence' when (i) he intends to commit that particular offen....
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....xchange in Burma Bazaar. They have given an explanation for the bulk sale memo which was not seized along with the foreign currencies and it was produced only subsequently. It is not the case of the appellant that the bulk sale memos given by Thomas Cook and Transcorp International were false and fabricated. All that they say is that it was not there at the time of seizure. But once the respondents had produced documents to support their case and to legitimize their possession of the foreign exchange, unless the Department is able to adduce evidence or produce materials to show that these bulk sale memos cannot be relied on, we cannot reject them merely on the ground that they were not seized contemporaneously with the foreign exchange. Therefore, the extracted statement of Soosai is not corroborated by any other evidence. Strict rules of criminal procedure and rules of evidence may not be applied to section 40 proceedings, where we can ignore rules of corroboration. If there is evidence of force or threat in recording statements, that is relevant too. If there are two probabilities, one of which rules out the involvement of the person, then we cannot order conviction. Therefore, w....
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.... encashment spot and stop a fraudulent encasher they are awarded by American Express. This instruction clearly shows that the normal procedure is signature and counter signature principle. But in the instant case, there is no dispute about the similarity of signatures. Hence, when signatures and counter signatures are available, the TCs could be encashed. The investigation conducted in this case has shown that M/s. IMEC have not retained even BTQ applications nor the so-called destruction certificate was fund to be in possession of M/s. IMEC and S/Shri Soosai and Balasubramanian." The Tribunal held that it cannot be said simply because the travellers cheques were countersigned that they were intended for illegal sale. If the appellant intended to sell the same illegally, it was easier for him not to sign these cheques at all, for in any case the buyer would be required to countersign the same at the time of their presentation. We are not able to accept this view. Inadvertently passengers may sign the travellers cheques on both sides. We cannot rule out such human errors. But 30 passengers signing inadvertently at the same time is too big a pill to swallow. 33. There is nothin....