TaxTMI 
TaxTMI 
2008 (6) TMI 649
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....'third appellant') and a penalty of Rs. 5,00,000 each against appellant P. Basu, Manager (in brief 'fourth appellant') and appellant Sukumar Mukherjee, Branch Manager (in brief 'fifth appellant'), for contravention of sections 6(4), 6(5), 7, 8(1), 49, 73(3) and 68 of Foreign Exchange Regulation Act, 1973, along with Para 11 of the Memorandum of Instructions of FLM issued by RBI, on the reason that the appellants, without due care and attention, sold foreign currency of US dollars 2,98,500 to fake passengers sponsored by fourteen fake companies/firms. While disposing off the application for dispensation of pre-deposit, this Tribunal by order dated 10-2-2006 rejected all the applications but allowed the appellants to deposit their respective penalty within 30 days from that date. The appellant successfully challenged this pre-deposit order dated 10-2-2006 before Calcutta High Court where pre-deposit order of this Tribunal is modified for furnishing of bank guarantee of (1) 20 per cent penalty by the appellant-company and (2) 15 per cent penalty by other appellants. According to the Counsel for the appellants, this order of Calcutta High Court is complied with. Presently, this appeal ....
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....000 US$ 24,500 Total US$ 2,98,500 5. The impugned order has discussed that two persons named Manas Kumar Maitra and Mrs. Rooma Maitra formed some fictitious firms/companies who gave certain names of sponsored persons for purchase of foreign currency projecting their impending foreign business tour but all these sponsored persons are not traceable. From the chart given in Para 4 above, it becomes clear from a cursory glance that the same man is sponsored under Entry 2 and Entry 12 within a span of one month period but by two different firms. Here, the difference of days of proposed foreign two travels is also only of a month. Similarly, same person's name figure in Entry 3 and Entry 4 with a difference of travel days of a month. Again this is repeated in Entry 5 and Entry 6 where not only the travel day but the firm's name is also same. The description in Entry 7 and Entry 8 or Entry 13 and Entry 14 has again projected a question that how same firm is sponsoring two different names within almost a period of one month only. These factual situations are glaring in their nature and how could not invite due care and attention of the appellants w....
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....FFE is in continuation of adjudication proceedings so will be governed by the provisions of FER Act, 1973. Therefore, this appeal is to be decided under law proper which is none else but Foreign Exchange Regulation Act, 1973, where from it also flows that limitation law prescribed by FER Act is applicable. 9. The language employed by section 49(4) of FEM Act, 1999, clearly stipulates that all offences committed under the repealed Act shall continue to be governed by the provisions of the repealed Act as if that Act has not been repealed. It is clearly available on the scene that adjudication order is passed under FER Act, 1973, because section 49(3) of FEM Act, 1999, permits taking cognizance of contravention of FER Act, 1973, within period of 2 years, i.e., up till 31-5-2002. 10. This right to appeal is a creature of statute. There is no inherent right of appeal unless given by statute whose provisions apply to an appeal. The Hon'ble Supreme Court in Om Prakash Batish v. Ranjit alias Ranbir Kaur AIR 2008 SC 2143 para 14 has observed as follows :- "The right to file an appeal is a statutory right. The Parliament may not provide such a right at all. The right to file ....
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.... :- "73. On critical analysis and scrutiny of all relevant cases and opinions of learned authors, the conclusion becomes inescapable that whenever there is a repeal of an enactment and simultaneous re-enactment, the re-enactment is to be considered as re-affirmation of the old law and provisions of the repealed Act which are thus re-enacted continue in force uninterruptedly unless the re-enacted enactment manifests an intention in compatible with or contrary to the provisions of the repealed Act. Such incompatibility will have to be ascertained from a consideration of the relevant provisions of the re-enacted enactment and the mere absence of saving clause is, by itself, not material for consideration of all the relevant provisions of the new enactment. In other words, a clear legislative intention of the reenacted enactment has to be inferred and gathered whether it intended to preserve all the rights and liabilities of a repealed statute intact or modify or to obliterate them altogether." (p. 373) 14. It is well-settled in law that the legal proceedings validity instituted are not effected by amended law though insofar as forum is concerned, the substituted forum shal....
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....ter dissolution of FERA Board before this Tribunal is akin to the appeal transferred to this Tribunal from FERA Board. The two categories of appeals, firstly those appeals which are transferred from FERA Board and secondly those appeals which are filed before ATFE after dissolution of FERA Board form one single class of appeals. Hence, a single set of legal provisions of FER Act, 1973, will apply for adjudication of all such appeals. The procedural law, including law of limitation, which is in built in the repealed statute, is required to be adhered to as provided in FER Act, 1973. 17. Though Foreign Exchange Regulation Act, 1973, admittedly gone out of the statute with effect from 1-6-2000 but section 49(3) of Foreign Exchange Management Act, 1999, talks about adjudication of the contraventions by adjudicating officer which takes place when repeal Act was in operation if cognizance is taken within a period of two years. Further, section 49(4) of Foreign Exchange Management Act, 1999, has saved the provisions of repealed Act so far as contravention committed of those provisions is concerned. In this situation it implicitly flows that adjudicating officer will take notice of the ....
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....e been looked into for a possible clarification. Once the objection is not taken at the outset, the appellants cannot agitate this ground at the stage of the first appeal without bringing out serious prejudice caused due to this reason. No prejudice has been caused by appointment of Shri Samir Mukhopadhaya as adjudicating officer. Ld. Counsel has not brought out any prejudice caused to the appellants in this regard. Therefore, this argument is liable to be rejected having no force. 20. Another ground taken on behalf of the appellant is that investigation started much after repeal of Foreign Exchange Regulation Act, 1973. According to Ld. Counsel Shri S.C. Ghosh, investigation by itself is wrongly conducted because the RBI intimated Enforcement Directorate for further investigation of the matter by letter dated 1-8-2000 which is the date on which Foreign Exchange Management Act, 1999, was in operation and Foreign Exchange Regulation Act, 1973, is no more in force. This argument also is neither correct nor acceptable. As discussed while dealing with first ground above, the provisions of section 49(4) of FEM Act, 1999, clearly indicate that offences committed under Repealed Act sha....
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.... Reserve Bank, an authorized dealer shall not engage in any transaction involving, any foreign exchange which is not in conformity with the terms of his authorization under this section. 2. Money-changers.-(1) to (3)****** (4) The provisions of sub-sections (4) and (5) of section 6 shall, insofar as they are applicable, apply in relation to a money-changer as they apply in relation to an authorized dealer. Explanation.-In this section, 'foreign currency' means foreign currency in the firm of notes, coins, or traveller's cheques and 'dealing' means purchasing foreign currency in the form of notes, coins or traveller's cheques or selling foreign currency in the form of notes or coins." 23. The appellants have been granted a licence to act as FLM under the provisions of section 7 where by method of drafting by incorporation under sub-section (4) the provisions of sections 6 (4) and (5) of FER Act, 1973 are made applicable. In the authorization of license itself it is inherent and implicit that appellants shall act with due care and caution. This legal duty casts an obligation on the appellants to act in good faith. Though the words 'good faith' is not fou....
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....tion and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted." 25. Therefore, the appellants after taking the licence/authorization under section 7 to work as full-fledged money changer cannot play hide and seek and say that sub-section (5) does not cast a duty on appellants to act cautiously as a reasonable man should do while making sale and purchase of foreign currency. The defalcation by a fraudster is required to be detected and curbed as per the standard envisaged for a reasonable person. The foreign currency reserve of the country cannot be lost in the way a fraudster manages and manipulates to cause harm without active role played by a FLM to catch the defalcation. 26. Though licence/authorization under section 7 of appellants is still available and renewed from time to time as argued by Ld. counsel Shri S.C. Ghosh but this fact by itself cannot wipe out the contravention, if any of the provisions of the statute. The RBI enjoys grant of power by the Parliament to permit authorization who can also revoke the authorization either under general power as a commitment of grant under General Clauses Act o....
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.... it is law." Equity can only supplement the law but it cannot supplant or override it. In Nasiruddin v. Sita Ram Agarwal [2003] 2 SCC 577 para 35, it is observed that :- "in a case where the statutory provision is plain and unambiguous, the Court shall not interpret the same in a different manner only because of harsh consequences arise therefrom. . . ." (p. 588) 30. The above rules of interpretation raises a big question mark against the correctness of the contention of Ld. Counsel Shri S.C. Ghosh where he has argued that section 8 of FER Act, 1973 does not include the money changer but is only restricted to other persons. The relevant part of section 8 of FER Act, 1973, reads as under :- "8. Restrictions on dealing in foreign exchange.-(1) Except with the previous general or special permission of the Reserve Bank, no person other than an authorized dealer shall in India, and no person resident in India other than an authorized dealer shall outside India, purchase or otherwise acquire or borrow from, or sell, or otherwise transfer or lend to or exchange with, any person not being an authorized dealer, any foreign exchange : Provided that nothing in th....
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....porating an interpretation clause will apply to the appellants. 33. The language of section 49(ii)( a) has stated that any permission or license whenever granted subject to certain conditions, the licensee, if fails to comply with or any of the conditions then he "shall be deemed to have contravened such provisions". By these provisions, reference is clearly made to section 8. In case it is found that appellants failed to comply with the conditions of authorization, they shall be deemed to have contravened sections of the FER Act under which they are permitted to acquire or sell or transfer foreign currency. The allegations are that these appellants have contravened section 8(1) which becomes absolutely clear when interpretation clause under section 49 is applied to authorization granted by RBI. 34. Next argument is about issuance of show-cause notice on 31-5-2002 which is the last date available under FER Act, 1973 where after 2 years sun set period ends up. It is contended that SCN is ante-dated but this contention is nothing but bald assertion without any basis. The show-cause notice was issued on 31-5-2006 within two years from the date of repeal of Foreign Exchange Regul....
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....eless behaviour of the appellants. We have earlier discussed the concept of good faith applicable to the appellants licensee. 38. It is argued by Ld. Counsel that the appellants have conducted their business with requisite care so in good faith, i.e., with due care and caution which is a sine qua non of every permission or license under the statute. The words to the effect that licensee shall act reasonably so as not to lead to contravention of statute are found incorporated in section 6(5) which by themselves create a duty to act in good faith. Also the implicit duty residing with the licensee, as discussed above conveys nothing less than good faith. Though, the word "good faith" is found or not defined in FER Act, 1973 nor expressly included in section 6 (4) and 6 (5), but this word is defined by section 52 of Indian Penal Code as well as by section 3(22) of the General Clauses Act. According to definition in Indian Penal Code 'good faith' is only when an individual acts with due care and attention which pre-supposes genuine efforts to reach to truth and not any ready acceptance of an ill natured belief (refer Harbhajan Singh v. State of Punjab AIR 1966 SC 97). To constitute g....