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2015 Supreme(Del) 217
HIGH COURT OF DELHI
VIPIN SANGHI, J.
M/s. Xerox Modi Corp Ltd. & Another – Appellants
Versus
The Special Director, Enforcement Directorate – Respondent
CRL.A. Nos. 300 & 58 of 2009
Decided On : 15-01-2015
For the Appellants:Vijay Nair with Neeharika Aggarwal, Shweta Bharti, Neelesh Sinha, Mishika Singh, Advocates
For the Respondent:Vineet Malhotra, Vishal Gohri, Jitender, Advocates
Headnote:
FEMA - Foreign Exchange Management Act - Section 8(3), 8(4), 68 - Exchange Control Manual, 1995 (ECM) - 7A, 20(i) - Summary of Acts and Sections: The court discussed the contravention of Section 8(3) and 8(4) read with Section 68 of FEMA read with para-7A, 20(i) of Exchange Control Manual, 1995 (ECM) and emphasized the breach of principles of natural justice, the obligation to provide all incriminating material before passing the adjudication order, and the discretion to impose penalties in quasi-criminal proceedings.
Fact of the Case:
The appellant company and its director were penalized for contravention of FEMA by the adjudicating authority. The main issue was the breach of principles of natural justice and the imposition of penalties without providing all incriminating material to the appellants.
Finding of the Court:
The court found serious infractions of the principles of natural justice and raised doubts about the alleged violation of FEMA. It emphasized the obligation to provide all incriminating material before passing the adjudication order and the discretion to impose penalties in quasi-criminal proceedings.
Issues: Breach of principles of natural justice, imposition of penalties without providing all incriminating material, and discretion to impose penalties in quasi-criminal proceedings.
Ratio Decidendi: The court emphasized the obligation to provide all incriminating material before passing the adjudication order and the discretion to impose penalties in quasi-criminal proceedings.
Final Decision: The appeals were allowed, and the impugned order-in-original, as well as the appellate order, were quashed. The amounts deposited by the appellants were ordered to be refunded without any delay.
Vipin Sanghi, J.
1. The present appeals under Section 35 of the Foreign Exchange Management Act, 1999 (FEMA) have been preferred to assail the common final order dated 24.10.2008 passed by the Appellate Tribunal for Foreign Exchange (The Appellate Tribunal) in Appeal Nos.401/2004 and 430/2004. The Appellate Tribunal by the impugned order dismissed the two appeals, preferred by the appellant company and its director Dr. Bhupendra Kumar Modi against the common order passed by the adjudicating authority, namely, Special Director, Enforcement Directorate, New Delhi (ED) dated 13.02.2004 bearing SDE/SKP/III/47/2003, by which penalty of Rs.22,75,000/- was imposed on the appellant company, and a penalty of Rs.7,50,000/- was imposed on the appellant-director of the appellant company for contravention of Section 8(3) and 8(4) read with Section 68 of FEMA read with para-7A, 20(i) of Exchange Control Manual, 1995 (ECM).
2. The predecessor-in-interest of the appellant company M/s Xerox Modi Corp Ltd. (now known as Xerox India Ltd.), namely, Modi Xerox Ltd. (MXL) was issued a notice dated 18.01.2002 by the ED alleging that MXL had not submitted the exchange control copies of the Bills of Entries to the authorized dealer, namely, Banof India as proof of actual import within the stipulated period of three months in respect of 64 remittances of Foreign Exchange made by MXL.
3. The appellant responded to the said notice on 28.01.2002. It appears that the appellant submitted the relevant documents and satisfied the ED with regard to 60 out of the 64 transactions in respect whereof notices had been issued. The four remittances in respect whereof the respondent sought to continue the proceedings were as follows:
1. JY 1734784 dt. 1.12.93
2. US$ 23587 dt. 10.5.96
3. GBP. 8367.17 dt. 13.12.96
4. GBP.91341.87 dt. 30.6.99
4. In respect of the first three remittances aforesaid, the Bank of India had acted as the authorized dealer, whereas in respect of the fourth remittance aforesaid, Citi-Bank was claimed to have acted as the authorized dealer. Citi-Bank certified that it had not made the alleged remittances of GBP 91341.87 on 30.06.1999, as alleged. Consequently, proceedings in respect of the same were dropped. The only aspect which needed examination was in relation to the first three remittances aforesaid.
5. The appellant sent a response on 07.02.2002 to the ED in respect of the aforesaid three transactions pertaining to Bank of India. The appellant claimed that though they had already submitted the proofs of their submission of exchange control copies of the bills of entries to the bank, it was taking time to retrieve data as the cases were quite old. Further time was sought to enable the appellant to resolve the cases with the Bank of India. A further reply was sent on 05.04.2002 stating that despite its best efforts, for almost two months with Bank of India, the appellant was not able to obtain the desired certificate.
6. Vide communication dated 14.05.2002, the appellant claimed – in respect of the two remittances of US$ 23587.20 and GBP 8367.17 aforesaid:
“Importer copy of bill of entries against both the above said cases have been sent to the office of Central Excise, Rampur, along-with our MODVAT claim and in-spite of our putting best efforts, we could not obtain the importer copy of bill of entry, duly attested from the Custom Authorities. In the meantime, we enclose copy of invoice, copy of TR-6 challan and copy of exchange control copy of bill of entries against both the cases.”
7. The appellant further submits that in relation to the remittance of GBP 8367.17, the appellant had submitted the exchange control copy of Bill of Entry to the Bank of India on 14.12.1996 along with several other Bills of Entries in respect of other remittances. A copy of the said document was produced before the adjudicating authority.
8. The appellant also claims that its banker, namely, Standard Chartered Bank had forwarded the appellant’s communic
