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2019 (10) TMI 174
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....nst the appellants for the contravention of Sections 6(4), 6(5) r/w Sections 49, 8(1), 9(1)(a) and 9(1)(e) along with Para 10.3 (ii), 10.12 & 10.17 of Chapter 10 of the Exchange Control Manual 1987 Vol. 1 issued by RBI. 2. It was alleged by the respondent no. 1 was that the contravening act of Canara Bank was that it had cleared four cheques issued by BFEA (which were denominated in non-convertible Indian Rupees) totalling Rs. 11 Crores, for the purpose of crediting the VOSTRO Account of Girobank Plc (convertible rupee account) maintained by ANZ Grindlays Bank. Thereupon, this money was freely transmitted outside India in foreign currency by Girobank Plc. Therefore, Canara Bank abetted in the illegal and unauthorized dealing of foreign exchange. 3. SCNS: T-4/19-B/93 (SCNs 38, 43, 48, 53) dated 25.06.1993 were issued in respect of 4 Cheques totalling Rs. 11,00,00,000.00 to the following noticees: (i) Canara Bank, Verma Chambers, 11, Homji Street, Mumbai - 1 (ii) Canara Bank, HQ, Bangalore (iii) Smt. S.A. Laxmi, Manager (iv) Shri M.M. Chungath, Officer (v) Shri P. Upadhyaya, Officer 3.1. The Charge in the 4 SCNs is that on various....
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.... the account of ANZ Grindlays Bank, Bombay. 7. It is the case of the respondent that on receipt of the said amount of Rs. 3,00,00,000/- from Canara Bank, the ANZ Grindlays Bank, M.G. Road, Bombay, an authorised dealer of Foreign Exchange in India credited to the non-resident rupee account no. O1CBB8316400 standing in the name of Girobank Plc, London. Thereby on the instructions from the Canara Bank, the non-convertible rupee funds of the BFEA into the convertible funds and transferred the same in foreign exchange to M/s Girobank Plc., Lindon a person resident outside India. Therefore, M/s. Canara Bank, Bombay abetted M/s. ANZ Grindlays Bank in contravening the provisions of Sections 6(4) & 6(5) read with Sections 49 and 73(3) and Section 8(1) read with Chapter 10 of ECM, 1987 and Sections 9(1)(a) and 9(1)(e) of the FERA, 1973. 8. Counsel for the respondent has made the following submissions which are outlined as under: Section 64(2) of FERA, 1973 reads as under: "Whoever attempts to contravene or abets any contravention of any of the provisions of this Act other than Section 13, Clause (a) of sub-section (1) of Section 18, Clause (a) of Sub-section (1) of Secti....
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....Rs. 25 million on 22/8/91. 9.4. All these cheques were issued by BFEA Moscow in favour of these payments pertains to medical equipment contract and settlement has to be done in India by rupees payments. 9.5. He has forwarded these cheques for clearing and clearing department presented these cheques in the inter bank clearing and credited Giro Bank‟s account. 9.6. The form A3 were also prepared by clearing department for these cheques. Canara Bank had not submitted any A# forms. 9.7. At the time when these cheques were deposited, if any instrument was not accompanied by from A3, clearing department which was processing the cheques were preparing form A3 for submission to RBI. 9.8. They were not aware about the procedure given by RBI in Chapter 10 of the ECM regarding transactions in Vostro accounts and therefore they had not insisted on submission of A3 form by Canara Bank. 9.9. Mr. Sood had submitted a covering letter from Keith Fairbrother in respect of one cheque and in case of other three cheques Mr. Sood had promised to submit covering letters. 10. Statement of Shri Padmanabha Upadhyaya, officer of Canara Bank. His statement was recorded on 1.3.93.....
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....ding an account. 12.6. Had he known that there are violations of FERA, he would never have accepted the job. 13. Findings of the Adjudicating Authority 13.1 The noticee is an authorised dealer in foreign exchange in India and they have been maintaining Vostro Account of BFEA, USSR. 13.2. Enforcement Directorate has initiated enquires on the basis of information received from RBI. 13.3. SCNs were issued to the Grindlays Bank. 13.4. The USSR was a country of bilateral group and therefore, the rupees held by the Canara Bank in the account of Bank of Foreign Trade, USSR should not have been credited to the account of Girobank Plc. London, a non-resident Bank in external group. 13.5. This adjudication order relates to the four such transactions wherein cheques were issued by BFEA of the USSR on Canara Bank, Bombay, deposited with Grindlays Bank, Mumbai, for the credit of the account of Girobank Plc., London favouring M/s. Eastern Suburbs Ltd. 13.6. Shri Kuldip Singh Sood deposited these cheques with Grindlays Bank, Bombay and the Grindlays Bank sent the same for collection to Canara Bank and the Canara Bank cleared these cheques. Thereafter, the Grindlays Bank cr....
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....ight of the definition of these words under Sections 107 and 108 of the Indian Penal Code. The inclusive definition although expansive in nature, "communication" or "association" must be read to mean such communication or association which is in aid of or render assistance in the commission of organized crime. In our considered opinion, any communication or association which has no nexus with the commission of organized crime would not come within the purview thereof. It must mean assistance to organised crime or organised crime syndicate or to a person involved in either of them. It, however, includes (a) communication or (b) association with any person with the actual knowledge or (c) having reason to believe that such person is engaged in assisting in any manner, an organised crime syndicate. ... Such communication or association to the person must be with the actual knowledge or having reason to believe that he is engaged in assisting in any manner an organised crime syndicate. Thus, the offence under Section 3(2) of MCOCA must have a direct nexus with the offence committed by an organised crime syndicate. Such abetment of commission of offence must be by way of accessories bef....
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....e clearly shows that ANZ Grindlays Bank Ltd was clearly aware that money would be repatriated outside-India and Canara Bank was not. (i) In Law Form A3 is required to be signed in terms of FERA Regulations, first by the Presenter Bank and thereafter forwarded to the paying bank, which bank is also required to sign the Form A3. (j) ANZ Grindlays Bank Ltd. while presenting the cheques never sent the Form A3, therefore there was no opportunity or question of Canara Bank signing the Form A3. (k) The aforesaid aspects of the matter though raised and clearly on record have not been dealt with by the Adjudicating Authority nor have been referred to. (l) On the contrary the Adjudicating Authority arrives at a finding or observation that because the account was ANZ Grindlays Bank Ltd. Sub Account, Girobank PLC, Canara Bank ought to have known that the money had gone abroad. This finding negates the basic feature namely, the account could be Indian Rupee account also. (m) Canara Bank never transferred, nor repatriated the sum outside. (n) The allegations against Canara Bank is only of Abetting ANZ Grindlays Bank Ltd. (o) It is im....
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....onomic Affairs of the USSR (BFEA) maintained a non-convertible rupee account with Vostro Section of the Appellant. Admittedly all the cheques were drawn by BFEA in favour of Girobank maintaining an account with ANZ Grindlays Bank in India. The said cheques were not accompanied by form A-3 which is a must in case the money is to be routed abroad and further there was no instruction as regards the same from either BFEA or ANZ Grindlays Bank. 20. The case against the Appellant is also that of abetting the ANZ Grindlays Bank Mumbai in the alleged transactions. Abetment is defined under the Indian Penal Code and the same reads as follows:- "Section 107: Abetment of a thing: A person abets the doing of a thing, who- Firstly, Instigates any person to do that thing; or Secondly, Engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy, and in order to the doing of that thing; or Thirdly, Intentionally aids, by any act or illegal omission, the doing of that thing." 21. Further clause 10.13 of the Exchange Control Manual, 1987 Edition lays....
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....is stated that from a conjoint reading of the facts and the definitions that there was neither any commission nor any omission on the part of the Appellant. Cheques issued by BFEA on an account maintained with Canara Bank were presented in the normal course of clearing and these cheques were honoured by Canara Bank. Canara Bank did not know at that point of time that the proceeds of those cheques would be remitted abroad after being credited to a convertible rupee account maintained at the ANZ Grindlays Bank. In any event the Canara Bank had nothing whatsoever to do with the crediting of money to the convertible rupee account of GIRO bank maintained at ANZ Grindlays Bank. It is settled law that to constitute abetment it must be established that there was active complicity and intentional aiding. Counsel has referred the reported case of Shri Ram vs. State of U.P. AIR 1975 SC 175 paragraph 6. It is alleged that it is not sufficient that an act on the part of the alleged abettor happens to facilitate the commission of the offence. Therefore no case of abetment is sustainable against the Appellants. The Adjudicating Authority has failed to show that the ingredients of abetment have....