ORDER

24.07.2024 This Order disposes of the Appeals Nos. FPA-FE-

167/DLI/2005, FPA-FE-168/DLI/2005 and FPA-FE- 169/DLI/2005 filed by M/s. Ambassador Construction (P) Ltd., Shri Vikram Singh and Shri R. C. Jain respectively, against the Order No. SDE(SKP)III/273/2004 dated 21.12.2004 passed by the Special Director, Enforcement Directorate, New Delhi. Penalty of Rs. 30 lakhs has been imposed for the contravention of Section 9(1)(c) of Foreign Exchange Regulation Act, 1973 (FERA) upon the Appellant Company M/s. Ambassador Construction (P) Ltd. Penalty of Rs. 2 Lakhs each has been imposed upon Shri Vikram Singh and on Shri R. C. Jain for contravention of Section 9 (1)(c) of FERA read with Section 68(1) ibid. Further, imposition of penalty of Rs. 5 lakhs was made on Shri Vikram Singh for contravention of Section 8(1) of FERA.

2. The Appellants challenged the Order dated 05.02.2007 of this Tribunal rejecting the applications for the waiver of pre- deposit of penalties before the Hon‟ble Delhi High Court. On rejection of their challenge by the Hon‟ble Delhi High Court, the Appellants moved the Hon‟ble Supreme Court where too the challenge was rejected. Consequently, the penalties were paid by the Appellants in 2011 and 2012.

3. The Learned Counsel for the Appellant argued that the case has been made out on the basis of the documents received from the Income Tax Department which are not admissible as evidence for the proceedings under FERA. He stated that the judgment of the Hon‟ble Supreme Court in the case of KTMS Mohammad has held that FERA is a special law which prescribes a special procedure for investigation of violation of FERA, hence, the evidence obtained during the investigation under the Income Tax Act could not have been used for the proceedings under FERA. The Ld. Adjudicating Authority has ignored the decision of the Hon‟ble Supreme Court in the case of S P Jain where FERA is held as quasi criminal in character and hence the respondent should have made out the case beyond reasonable doubt. Since, the Ld. Adjudicating Authority relied upon the statement of one Shri J L Kothari who was not subjected to cross-examination, there were violations of principles of natural justice. He cited the judgements of Karan Vir Mehta [1998(97) ELT 42] and Bareily Electrical Supply Co.

v/s The Workman [AIR 1972 SC 330].

4. The Ld. Counsel for the Appellants argued that Para 10 C.13 of Reserve Bank of India (RBI) Manual on Foreign Investment in India in Housing and Real Estate Development permitted NRIs/ OCBs to invest upto 100% in the new issue of equity shares/ convertible debentures of Indian companies engaged in real estate development which covered their case. The transfer of US $ 5 lakhs from Shri J L Kothari, a resident abroad, was in the equity capital of the Appellant Company. The amount was transferred thereafter to the account of another company M/s Neptune Estate Pvt. Ltd. on the explicit instructions of Shri Kothari vide letter dated 15.12.1995. He contended that the nature and purpose of the investment remained unchanged despite the transfer. Since the declaration for direct investment by NRI in Indian company was submitted to RBI for issuance of shares to Shri Kothari the receipt of money from Shri Kothari was in the form of investment. He also stated that the MoU dated 05.12.1995 signed between the Appellant Company and Shri Kothari substantiates this nature of transfer of funds. Therefore, the finding of contravention of Section 9(1)(c) of FERA by Ld. Adjudicating Authority does not hold good.

5. The Ld. Counsel for the Appellants further argued that since the identity of Shri Rakesh Saxena has not been established and no other witness has been examined, the finding of contravention of Section 8(1) of FERA for an amount of US $ 1 lakh against the Appellant Shri Vikram Singh cannot be sustained.

6. The Ld. Counsel for the Appellants stated that the Ld. Additional Chief Metropolitan Magistrate (ACMM), Patiala House Courts, New Del