TaxTMI 
TaxTMI 
2009 (9) TMI 1085
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion order No. 24/2005/FEMA/DD(SLH) dated 15-12-2005 (whereby the appellants are held guilty of contravention of Section 10(4), 10(5) read with 42 FEM Act 1999) and remanding back the matter for reconsideration by Adjudicating Authority after taking into consideration of observations made in para 10 of the impugned orders by Special Director (Appeals) FEMA. This Tribunal while disposing off application for dispensation of pre-deposit of penalty directed the appellant, to make pre-deposit of 50 per cent amount of penalty by order dated 12-1-2007. The appellants complied with this pre-deposit order. 3. This Tribunal by order dated 27-6-2007 affirmed the order dated 15-12-2005 of Special Director (Appeals) FEMA whereby these appeals were remanded back to the adjudicating authority for reconsideration of the matter. Against order dated 27-6-2007 of this Tribunal the appellants approached Madras High Court when Hon'ble High Court by order dated 22-12-2008 quashed and set aside the order of this Tribunal and further directed this Tribunal to dispose off these appeals on merits. Thus these appeals are restored back and are further taken up for final disposal on merits. 4. The appell....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ld. Counsel Shri Hari Radha Krishnan has filed written submissions where arguments are recorded with elaboration. These arguments will be taken one by one while considering the pros and cons of this appeal. 8. The argument taken by Shri Hari Radha Krishnan, Advocate, is that the appellants, who are holder of license by RBI as FLM, so cannot contravene the provisions of sections 10(4) & 10(5) read with section 42 FEM Act 1999. The conclusion of contravention of section 10(5) and 10(6) read with Section 42 cannot be committed by the appellants whose license by RBI is renewed from time to time and they are in possession of valid license till date. As RBI has not made a positive finding of violation of the Foreign Exchange Management Act, 1999, so license of FLM held by appellants is renewed. Thereafter, the Enforcement Directorate is devoid of any power not only to investigate but adjudicating authority also cannot hold them guilty. Also, it is argued that contravention of the Foreign Exchange Management Act, 1999, when not found by RBI under the powers granted under the statute is sufficient to prove innocence of the appellants. 9. The relevant provisions are contained in Sect....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as binding on the FLM. This method has adopted, as stated above, a technique of legislative drafting by incorporation under section 10(4) FEM Act which clearly binds the appellants herein to follow all the instructions or directions issued by RBI. Also sub-section (5) of section 10 has stated that "authorized person shall before undertaking any transaction in foreign exchange on behalf of any person, require that person to make such declarations and to give such information as will reasonably satisfy him that the transaction will not involve, and is not designed for the purpose of, any contravention or evasion of the provisions of this Act or any rule, notification, direction or order made thereunder, and where the said person refuses to comply with any such requirement or makes only unsatisfactory compliance therewith, the authorized dealer shall refuse to undertake the transaction and shall, if he has reason to believe that any such contravention or evasion as aforesaid is contemplated by the person report the matter to the Reserve Bank." 11. The Foreign Exchange Management Act, 1999, has created regulatory mechanism and the contravention thereof can be nicknamed as regulatory....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f foreign currency may be a rare circumstance but as stated above, sub-section (5) of section 10 clearly cast a duty on appellants to look by itself for the purpose of catching the defalcation of any kind by fraudster. Otherwise the object of granting of licence/authorization is totally lost which can never be the intention of the Parliament in enactment of the FEM Act, 1999. There is a strict liability in the regulatory measure provided by FEM Act. 1999 where motive or intention is not relevant. The mens rea need not be proved by Enforcement Directorate as has been held in State of Maharashtra v. Mayer Hans George AIR 1965 SC 722. 15. The golden rule of interpreting a statute is to ascertain the intention of the legislature and such intention is primarily to be gathered from the language used which means that attention should be paid to what has been stated and also to what has not been stated. As a consequence any construction which requires addition or substitution of words or rejection of words as meaningless has to be avoided. Rules of interpretation do not permit courts to do so, unless the provision as it stands is meaningless or of doubtful meaning. The courts are not en....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s :- "The standard of care and caution must be judged according to the capacity and intelligence of the person whose conduct is in question. It is only to be expected that the honest conclusion of a calm and philosophical mind may differ very largely from the honest conclusions of a person excited by sectarian zeal and untrained to the habits of reasoning. The question of good faith must be considered with reference to the position of the accused and the circumstances under which he acts ......... The law does not expect the same standard of care and attention from all persons regardless of the position they occupy. What is due care and attention depends on the position in which a man finds himself and varies in different cases. (AIR 1940 Rang 129 at p. 132)" 20. The Orissa High Court in State of Orissa v. Ram Bahadur Thapa AIR 1960 Ori. 161, while discussing the factual situation of an accused who caused death in the belief that he is attacking ghost, observed on the question of applicability of good faith that he being a nepali uneducated fellow, he was not expected to be extra careful. But in the present case, the appellants are themselves authorize....