AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (5) TMI 67
X X X X Extracts X X X X
X X X X Extracts X X X X
....s) Regulation 2000 in terms of Section 42 of FEMA, vide the Impugned Order. The Applications filed on 26.02.2026 by the Appellants Shri Haresh Sanghvi and Shri Tushar P. Sanghvi seeking permission to place on record the rejoinders to the reply filed by the Respondent are allowed and the rejoinders are taken on record. 2. Ld. Counsels for the Appellants pleaded that around 1989, Sudan had undergone a political turmoil. Several African countries had faced acute shortage of foreign currency and hence their local currencies had been devalued. The payments against the exports were thus defaulted. The Appellant Company also could not realise certain export proceeds. Accordingly, RBI granted time till 31.03.2006 to them to realise proceeds for exports made to Sudan in respect of 33 GRs of 1990 deposited through State Bank. Similarly, RBI granted extension of time till 31.03.2006 for realisation of export proceeds in respect of 133 GRs of 1999 to 2001 lying with J&K Bank. Ld. Counsel further argued that after the exports were made, the foreign buyers in Sudan deposited the proceeds in the local banks in Sudan, which acted as an agent/correspondent bank of J&K Bank and State Bank. Upon s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....w and no adverse inference could be drawn. 5. Ld. Counsel for the Appellant Shri Haresh Sanghvi argued that in order to impose liability under Section 42 of FEMA, it is essential to prove the fault of the concerned Director. In fact, the Appellant was the only partner, who made attempts to repatriate the export proceeds. He travelled to Sudan for realization of the export proceeds. It was the Appellant, who approached the Indian Banks to contact the Sudan's Banks. Ld. Counsel for the Appellant pleaded to allow the Appeal. 6. Ld. Counsel for the Appellant Shri Tushar P. Sanghvi argued that summons were issued for the first time in the year 2007. Whereas, the Appellant was not made a party to the earlier FERA proceedings and consequently no summons were issued to the Appellant. Pertinently, no question with respect to the liability of the Appellant or alleged siphoning of monies was raised by the Adjudicating Authority during the FERA proceedings. The Respondent on one hand is alleging that during the relevant period, the Appellant had acted in the position of a Constituted Power of Attorney, whereas, on the other hand, he was neither made a party to the proceedings nor any sum....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2003, 07.08.2003, 02.09.2005, 14.09.2007, 26.02.2009. 18.03.2009, 19.01.2010 & 06.01.2011, and to Sh. Tushar P. Sanghvi, Constituted Attorney of Meridian on 02.09.2005, 14.09.2007, 26.02.2009, 18.03.2009, 19.01.2010 & 06.01.2011. J&K Bank on 04.09.2006 was requested to verify the details of outstanding export bills for which permission had been allowed to repatriate export proceeds till 31.03.2006. J&K vide their letter dated 05.10.2006 informed that the export bills were still outstanding. A similar request was also sent to State Bank of Bikaner & Jaipur, Fort Branch, Mumbai to inform details of outstanding export proceeds vide letters dated 04.09.2006 & 26.02.2009. State Bank vide letter dated 11.02.2010 informed that they have not received any payments for 33 GRs of Meridian for the period of September and December, 1990. The J&K Bank in its appeal before DRAT had argued that Meridian themselves had sought extension of time from RBI for realization of the proceeds and in spite of extension of time granted by the RBI, they did not take any steps for realization of the proceeds. It was also argued that the RBI directed Meridian to pursue the matter vigorously with the overseas bu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hearing before the Ld. AA, it was pointed out that the signature of Constituted Attorney of the firm were appearing on some of the letters addressed to J&K Bank seeking extension of time for some of the GRs in dispute. It was an admitted fact that Shri Tushar Sanghvi had signed such documents on behalf of the Meridian. It is pertinent to note that these documents were produced by the Appellants themselves during hearing before the Ld. AA. Therefore, considering these submissions the Appellants have been rightly found in violation under section 42 of FEMA. 1999 read with Section 8 of FEMA. Ld. Counsel therefore pleaded to dismiss the Appeals. 11. We have considered the rival submissions and the material on record. First and foremost, it is to be noted that the Appeal No. FPA-FE-20/MUM/2013 filed by M/s Meridian Export and Industries was dismissed by this Tribunal on 04.04.2018. Since, the said Order is of significant relevance for the two Appeals before us, the Order is reproduced below: "It is evident that the appellant has failed to comply with the order dated 21st November, 2016 passed by the Bombay High Court whereby the eight weeks time is granted to deposit the amo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t the DRT Order of 2004. It therefore appears that although notice for dissolution has been given & one of the partners has died, the affairs of the partnership firm have not been wound up & firm still exists." 14. Ld. AA has gone on to deal with the other issues raised by the Appellants in the following paragraphs: "31. In an appeal filed by the Directorate before the Madras High Court in the SRC Exports Pvt. Ltd. case, the Hon'ble Madras High Court vide Order dated 08.04.2002 in CMA No. 1583 to 1590 of 1999 and CMP No. 18424 to 18431 of 1999, 22077 to 22084 of 2000 set aside the above order of FERA Board and held that the statement that remittance of export value is being made in local currency is as good as actual realisation and the exporters are not responsible once the payments is made in local currency is not correct. The Hon'ble Madras High Court held as follows: "22. The view of the Board that the alleged payment in local currency would absolve the liability of the exporter is patently illegal. The Board proceeded on the basis that the Special Director has lost the business perspective and that a single step in getting the amount deposited in l....
X X X X Extracts X X X X
X X X X Extracts X X X X
....The impugned order contains no error which is required to be affirmed and sustained. The penalty amount is neither harsh nor excessive when compared to the amount involved so need not be disturbed. Accordingly his appeal is dismissed." 36. In view of the above, the averment of Meridian that they have taken all reasonable steps to recover the outstanding export proceeds is not correct. 37. As observed by the Hon'ble Madras High Court in their aforesaid order clearly that a single step in getting the amount deposited in local currency will not constitute all reasonable steps for repatriation of value of export goods. Further, the fact remains that even though the export proceeds of a bill of March 2000 were said to be deposited in local currency but not repatriated, Meridian offered to export goods to the same buyer till May 2001. In addition, as already been observed above, no evidence has been produced that the 33 bills of November and December 1990 were realised from the foreign buyer in local currency. xxxx 39. The next issue to be examined is whether action can be taken under FEMA for goods exported during the period when FERA was in force. I fi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot imply that these GRs were already included in the previous proceedings. The last GR covered in the previous notice is of 23.9.99 whereas the first GR in the present proceedings is of March 2000. 41. Further, in respect of 33 GRs of State Bank, the plea that no action can be taken against them under FEMA is not correct. The relevant date for recovery of exports made at a time prior to June 2000 where export proceeds were to be realised after June 2000 has to be taken under FEMA. In the instant case, the relevant date for the purpose that the default would arise under Sec. 8 is the time up to which RBI had allowed to repatriate the export proceeds. Therefore, the offence would only arise on 31.03.2006. The proceedings can only be launched under the law prevailing on that date i.e. under FEMA. The noticee has pleaded that action under FEMA should be taken within reasonable time, as 22 years have lapsed since exports were made. I find that RBI has allowed the exporters 16 years time to bring back the export proceeds. The Directorate issued directives and summons to Meridian and its partners under FEMA, 1999 calling for details of pending realisation of export proceeds in Se....