TaxTMI 
TaxTMI 
2021 (1) TMI 1035
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.... as laid down in para 7A.21 of Chapter-7 of Exchange Control Manual, 1993 of RBI. 3. It is stated by the SIBL is continuously holding license from the Reserve Bank of India (RBI) for dealing in foreign exchange since 1974. Like many other branches of the SIBL, its branch at Nariman Point, Mumbai-21 is one among them which was designated as a "B" category Branch in the year 1979 for the purpose of dealing with foreign exchange and that the managers of all such branches are vested with necessary powers for allowing foreign exchange transactions, on receipt of necessary import documents and that no specific sanctioned/approval from higher authorities is required to be obtained by such branches for authorizing such payments. 4. And that, the Enforcement Directorate initiated adjudication proceedings against certain importers alleging contravention of Section 8(1) of Foreign Exchange Regulation Act, (FERA) 1973 for acquisition of foreign exchange and under Section 8(2) and 8(4) of FERA, 1973 for not bringing into India the goods of the value, quantity and quality for which foreign exchange was acquired by the parties through the appellant bank by seeking remittance on the basis of....
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....umar Kantilal Javeri, Proprietor of M/s. Kumar Exports remitted a sum totaling US $ 80,150/- remitted to M/s. Lawram Import & Export, Singapore through the aforesaid account. 4. M/s. D.N. Exports opened on July, 1991 vide account no. 785, Shri Dilip Nanalal Shah, Proprietor of M/s. D.N. Exports remitted a sum totaling US $ 44316/- to M/s. Lawram Import & Export, Singapore through the aforesaid account during the year 1991 5. M/s. R.M. International opened on October, 1991 vide account no. 807, Shri Harshad P. Mehta during the period from 12.11.1991 to 17.12.1991, amounts totaling US $ 501900.70/- remitted to M/s. D.R. Kapadia, Hongkong through aforesaid account against submission of certain Import documents in the assumed name of Shri Rajesh Vijay Mehta, Proprietor of M/s. R.M. International by Shri Harshad Mehta. 6. M/s. P.M. International opened on December, 1991 vide account no. 820, Shri Hemant D. Barot during the period from 18.12.1991 to 27.11.1992 remitted amounts totaling US $ 2,09,85,242.05/- to M/s. H. Barot, Hongkong in the assumed name of Smt. Smita R. Mehta as Proprietor of M/s. P.M. International. 7. M/s. Rakesh International opened on July,....
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....nts through the aforesaid 09 accounts, the said S/s Kasturi Rangan and Jacob John (the functionaries of the SIBL at the relevant time) have failed to follow the procedures as laid down in para 7A.21 of Exchange Control Manual, 1993 RBI to ensure genuineness of the import and thereby allegedly abetted the illegal transfer for the aforesaid amount of foreign exchanges totaling to the tune of US $ 8,34,85,657.62/- from the abovesaid 09 accounts with the SIBL. On the basis of aforesaid allegations the SIBL has been charged with contraventions of Sections 8(3) read with 8(4) and 64(2) of FERA, 1973 and violation of para 7A.21 of Exchange Control Manual of RBI. 12. And that, the aforesaid allegations against SIBL is leveled without explaining as to how the liability has been arraigned against the SIBL's Mumbai Branch, whether direct or vicarious, was not even averred. It could not be "vicarious", as firstly of Section 68 of FERA, 1973 was not invoked in the charging para 46 in the SCN and secondly nor it could be vicarious as appellant bank could not be responsible by deemed fixation of Section 68 of FERA, 1973. Moreover, Sections 8(3) & 8(4) do not contemplate care and caution as an ....
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....legal and liable to be set aside. (C ). For that, the Ld. Adjudicating Authority erred to impose penalty for alleged infraction of para 7A.21 of Exchange Control Manual and that in terms of the law laid down by the Hon'ble Supreme Court in the case of LIC v/s. Escorts Ltd. AIR 1986 SC 1370, for infraction or alleged violation of provisions of Exchange Control Manual, the appellant bank cannot be visited with penalty in an adjudication proceedings under FERA, 1973 and that the charge against the appellant bank's branch at Nariman Point, Mumbai is that it abetted contravention of Section 8(3) and Section 8(4) read with Section 64(2) of FERA, 1973 whereas while pronouncing the Order imposing Penalty on Mumbai Nariman Point, Branch of the appellant bank, the Ld. Adjudicating Authority committed grave error in citing contravention of Para 7A.21 of Chapter 7 of Exchange Control Manual, 1993 Edition of Reserve Bank of India in addition to Sections 8(3) & 8(4) read with Section 64(2) of FERA, 1973 and that the Ld. Adjudicating Authority erred in imposing penalty on alleged contravention of provisions of Exchange Control Manual, 1993 since adjudication for violation of Exchange Control M....
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....nch and such act is the individual act of the official and cannot be presumed to have been committed under the colour of his office because such service jurisprudence make the employers protective umbrellas of criminals therefore the order of penalty imposed by the Adjudicating Authority is erroneous and misconceived and the order is a nullity. (H). For that, it is not permissible for the Adjudicating Authority to twice take the notice of the contravention i.e. once on 04.01.2002 and thereafter on 13.02.2002 as after taking the notice the Adjudicating Authority had become functious officio and could not have taken notice and added Mumbai branch of the bank as notice on 13.02.2002 and that the corrigendum/addendum is permissible to correct only "clerical errors" as envisaged under Section 65 of FERA, 1973 as it amounts to review of the earlier order dated 04.01.2002 and that the corrigendum being illegal the whole proceedings became void ab-initio. (I). For that, there is no provision in FERA, 1973 to add a person as noticee after issuance of show cause notice, the "corrigendum/addendum" is erroneous in law. (J). For that, the appellant's bank branch was victim and comrade ....
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....dicating Authority failed to record any reasons or findings as to how the branch of the appellant bank abetted the contravention of Sections 8(3) read with Section 8(4) read with Section 64(2) of FERA, 1973. On recording of reasons is very fatal as the base of allegation is abetment. (Q). For that, in the absence of determination that the company has committed the offence, the charge of contravening the offences cannot be framed and that in the instant case the Authority as well as the Ld. Adjudicating Officer has sought to apply the provisions of Section 68 of FERA, 1973 reversely, in as much as, from the alleged negligence of the official, the company is made liable which is erroneous and contrary to the concept of vicarious liability. (R). For that, the Adjudicating Authority has never discussed anywhere the merit of the case, so far as the appellant bank is concerned and that the bank deal in documents and not in goods as per the provisions contained in Uniform Customs Practices (UCP) for collection Bills and that the appellant bank has not made any unlawful gains for carrying out the transactions. 15. The Respondent vide the common written submissions submitted that:-....
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.... act and the total penalty imposed in the present case has approximately more than 3 thousand crore. This fact itself shows the seriousness of the case and the loss of exchequer to the Government of India. The modus/operandi have been explained in details in the order of Adjudicating Authority in Para-68 of the order. (iv). For that, the banks and individuals were duly representated through its counsels during the Adjudication Proceedings which could be ascertain from the order of Adjudicating Authority UCO Bank presented its case before Adjudicating Authority in Para's - 95, 82, 83, 206, similarly, State Bank of Hyderabad in Paras 116, 124, South Indian Bank, Para-210 and Dena Bank at Paras - 211 in impugned order have been discussed in details including other banks also and role of its official. After affording the opportunity and after being heard the Adjudication Authority have given finding Paras - 222 with regard to UCO Bank and its official and P-231m, 234, South Indian Bank P-234, 235, P-236 UCO Bank, P-248 Dena Bank, Similarly, of other banks and its officials. (v). For that, the banks has filed their synopsis and mostly everybody has taken the s....
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....has examined the issue in details and relying upon the earlier judgment of the Hon'ble Supreme Court in Rambali State of U.P held that the delay in pronouncing the judgment will not render the judgment illegal since no prejudices has been caused. M/s. Telestar Travels Pvt. Ltd. & Ors. v/s. Special Director of Enforcement JT 2013 (3) SC 157. Elaborating that submission Mr. Diwan argued that since the adjudication order had been passed by the authority concerned nearly 3 ½ years after the matters was finally argued before it, the requirement of affording an opportunity of being heard to the appellants arising under Section 51 of FERA was not satisfied. It is submitted that the appellants had been prejudiced on account of delayed pronouncement of the adjudication order as the pronouncement of the order as the pronouncement of the order by the Authority had been delayed. On behalf of respondent, it was per contra argued by Mr. P.P. Malhotra, learned Additional Solicitor General, that the order passed by the Adjudicating Authority was fully complaint with the provisions of Section 51 read with Section 30 of the Rules under FERA and could not be treated as an ex ....
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.... to confine the operation of S. 68 of the Act. Merely because the expression 'punished' is used, it does not mean that it is confined to a prosecution under S. 56, since the element that attracts the imposition of penalty and the prosecution is the same, namely, the contravention of any of the provisions of the Act. Moreover, there is nothing in the Act which, confines the expression punished' only to a punishment for a criminal prosecution an imposition of a penalty can also be a punishment. If a person, includes a company. There is no reason to confine S. 68 to a prosecution only, because the company as a person is liable to be proceeded against under S. 50 and S. 56 of the Act, though in a criminal prosecution the punishment by way of imprisonment can be imposed only on the officer or officers of the company referred to in S. 68 of the Act. S. 68 only indicates the manner in which a contravention by a company can be dealt with and it is a general provision relating to a contravening company, which is to be proceeded against whether it be under S. 50 or under S. 56, the fact that a fine alone can be imposed on a company in a prosecution under S. 56 of the Act. Cannot be ground to....
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....re free one has disappeared in modern times and now mostly the question is 'what is true construction of the statue' here, the legislative intent to prosecute corporate bodies for the offence committed by them is clear and explicit and the statute never intended to exonerate them for being prosecuted. It is sheer violence to common sense that the legislative intended to punish the corporate bodies for minor and silly offences and extended immunity of prosecution to major and grave economic crimes. As the company cannot be sentenced to imprisonment, the court cannot impost that punishment, but when imprisonment and fine is the prescribed punishment the court can impose the punishment of fine which could be enforced against the company, such a discretion is to be read into the section so far as the juristic person is concerned. There is no blanket immunity for any company from any prosecution for serious offences merely because the prosecution would ultimately entail a sentence of mandatory imprisonment. The corporate bodies, such as a firm or company undertake a series of activities that affect the life, liberty and property of the citizens. Large-scale financial irregulari....
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....tate of Maharasthra and Other (2005) 5 SCC 295 has defined the meaning of abatement and establishes that the bank and its officers not only added illegal Act but also abated. As far as Section 8(3) and 8(4) is concern the provision contemplate to unauthorized possession of foreign exchange by persons other than and authorized dealer and the plead of the appellants that the banks are authorzed dealer hence, the provision cannot be invoked against the banks. The contentions of the appellants are not sustainable as the Bank and individuals are charged for contriving u/s 8(3), 8(4) read with section 64(2) to contravene or abet any contravention of, any of the provisions of this Act or any rule, directions or order made here under shall for the purposes of this Act be deemed to have contriving provisions rule, directions or order as the case may be. In view of this it is respectfully submitted that the bank has added and abated the crying and same with including the individuals who have given shape to the commission of this crime. The provisions can be read in isolation and it is the totality of facts and circumstances, which establishes the active add and abatement by the bank....
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....t. (xi). For that, the plea of the appellant that false documents is contrary to the basic definition of the forgery as it is an admitted case that the forged import documents were submitted to the banks and the bank without verifying its genuineness release remittances in foreign currency to the individuals abroad defiantly documents were forged and on the basis of same huge foreign remittance were made abroad. (xii). For that, it is further, submitted that the Exchange Control Manual 1993 would also be applicable with the illegal transactions have taken place after 1993 also as per the admission of the appellant which further shows the seriousness that even the bank has deliberately and intentionally did not follow the Exchange Control Manual 1993 issued by the Reserve Bank of India to stop such illegal transactions. This is a clear example wherein the bank has not only abated the crime but also added full cooperation in committing the same. In the present case and from the overall facts as well as conduct of the bank it is proved that the Banks possessed both mans-rea as well actus-rea in perpetuating this crime and squarely false with in the definition of abat....
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....tiously, if possible, within six months." In the aforesaid judgments their lordships of Hon'ble Supreme Court in the matter of Kanahaiyalal & Ors. v/s. Anoop Kumar & Ors. JT 2002 (10) SC 98 while referring to Shri Bhagwandas Fatechand Daswani (Supra) case held that: 9. In the light of what is stated above, in our view, the impugned judgments cannot be sustained. Further, as stated above, the arguments were heard in November, 1990 and the High Court pronounced the judgments on 7th May, 1993. This Court in Bhagwandas Fatechand Daswani and Ors. v. HPA International and Ors. , dealing with the contention that the long delay in delivery of judgment is sufficient to set aside the judgment under appeal without going into this broad question, set aside the judgment under appeal on the ground of delay in delivery of judgment without expressing any opinion on the merits of the case and remitted the case to the High Court for deciding the appeal afresh on merits. While doing so this Court observed, "However, it is correct to this extent that a long delay in delivery of judgment gives rise to unnecessary speculations in the minds of parties to a case. Moreover, the appellants whose....
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....undesirable even when written arguments are submitted. It is not unlikely that some points which the litigant considers important may have escaped notice. But, what is more important is that litigants must have complete confidence in the results of litigation. This confidence tends to be shaken if there is excessive delay between hearing of arguments and delivery of judgments." (emphasis supplied) 7. In view of the above, it is very clear that the authorities under me Act are obliged to dispose of proceedings before them as expeditiously as possible after the conclusion of the hearing. This along would ensure that all the submissions made by a party are considered in the order passed and sure that the litigant also has a satisfaction of noting that all his submissions have been considered and an appropriate order has been passed. It is most important that the litigant must have complete confidence in the process of litigation and that his confidence would be shaken if there is excessive delay between the conclusion of the hearing and delivery of judgment. 8. Therefore, in this case we find that the delay by the Adjudicating Authority in rendering its orde....
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..... The first limb of the contention urged by Mr. Diwan, therefore, fails and is hereby rejected." In the judgment passed by Hon'ble Supreme Court in the matter of M/s. Telestar (Supra) the fact was also that "that apart delay pronouncement of order by the Adjudicating Authority was not urged as a ground of challenged before the Tribunal or the High Court both of whom have remained silent on this aspect." 18. In this particular appeal of SIBL, it has been urged that the appellant bank is prejudiced as none of the contentions on facts and legal issues have been addressed and it is prejudiced by delay in pronouncement of the judgment by the Adjudicating Authority. It also appears that the impugned order is suffering from material irregularity in causing prejudice to the appellant. In view of the above the M/s. Telestar (Supra) judgment relied on by the Respondent ED is distinguishable. 19. On the other hand the judgments, cited by the appellant on the delay pronouncement of the judgment, are applicable in the present facts and circumstances of the case. The Adjudicating Authority has also not explained, in the impugned order, the reasons of such a huge and undue delay in deliv....