TaxTMI 
TaxTMI 
2024 (9) TMI 561
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....peals has been filed under Section 19 of the Foreign Exchange Management Act, 1999 (in short `the Act of 1999') to challenge the order dated 14.05.2010 passed by the Special Director. 2. The appeal has been preferred by the Standard Chartered Bank and its erstwhile employees. However, for convenience, a prayer was made to refer the facts from the appeal preferred by the bank. 3. It is a case where a Show Cause Notice was issued to the appellant bank and others in January, 1994. After a reply and consideration of the case, penalty of Rs.65 lakhs was imposed on the appellant bank and Rs.10 lakhs each on the officers filed the connected appeals. 4. The appellant said to have contravened Sections 6(4), 6(5) read with Section 49, Sectio....
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.... been transferred to make it convertible. 7. The counsel for the appellants submitted that an inadvertent errorcan at the best be referred to be a negligence,thus could not have resulted in huge penalty. It is more so when the non-convertible funds amounting to Rs.1.15 crores were brought back and in any case, it could not have been alleged to be a case of consent or connivance of the appellants, rather as stated, it can bea case of negligence. 8. The counsel for the appellants made a reference to the Writ Petition No. 3881/95 filed before the High Court to challenge the Show Cause Notice. The said Writ Petition was finally decided by the Division Bench of the High Court by its order dated 21.01.2010. It is with the finding that no pr....
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....passed by the Adjudicating Authority without the assistance of the respondent. It was only after hearing the appellant that order was passed and, therefore, the Adjudicating Authority itself pleaded the respondent's case and thus became the judge of its own cause. In fact, pursuant to the judgment of the Delhi High Court dated 21.01.2010, ED was required to look into as to whether they should proceed further with the Show Cause Notice or not. There was no response to the order of the High Court and ignoring the aforesaid, the Adjudicating Authority passed the order without assistance of the ED thereby it became judge of its own cause. The impugned order deserves to be set aside on the aforesaid ground also. (3) The imposition of pe....
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....d non-convertible amount in the bank account of Dr. Ramaakrishnan. It was transferred in the accounts of Dr.Ramakrishnan out of the country though it was not convertible so as to be transferred to make it convertible currency. 13. The appellant bank hastried to justify the act of its officers. It was stated that an inadvertent mistake was committed in transferring non-convertible amount to various bank accounts of Dr. Ramaakrishnan out of the India but the entire currency was brought back. 14. The fact, however, remains that the appellants had acted in contravention of the provisions of the act of 1973 to make non-convertible amount to be convertible without prior permission of the RBI. Subsequently, if the amount was brought back, th....
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.... Adjudicating Authority has become the judge of its own cause. The argument aforesaid is not tenable because Adjudicating Authority is under obligation to take note of the facts available on record and the material placed by the ED and it is pursuant to it only, Show Cause Notice was issued by the Adjudicating Authority. The material was not required to be produced by the ED again on service of notice rather after giving proper hearing to the appellant, the impugned order was passed. The Special Director did not act as a judge of its own cause, rather considered the material on record and passed the order, accordingly we do not find any merit even on the second ground. 17. The issue now remains as to whether respondent/Adjudicating Autho....
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.... pass an appropriate order. In the instant case, the procedure aforesaid was adopted thus we do not find that the Adjudicating Authority became judge of its own cause. 19. We, however, find that the penalty could have been imposed after taking note of the judgment of the High Court. However, in the instant case, a penalty disproportionate to the default and the contravention has been imposed. It is a fact that non-convertible currency was made convertible in violation of the Act of 1973 but for the aforesaid contravention, the penalty is disproportionate. The Delhi High Court has taken it to be a case of negligence thus the penalty should have been restricted to the allegation of negligence. 20. We have accordingly examined each issue....