APPELLATE TRIBUNAL FOR FOREIGN EXCHANGE (FROM NEW DELHI)

Appeal

397 of 2005, 398 of 2005, 399 of 2005, 400 of 2005

RAJ SOLVEX LTD - Complainant(s)

Versus

SPECIAL DIRECTOR, ENFORCEMENT DIRECTORATE - Opp.Party(s)

BEFORE: Vinay Kumar Mathur, S D Singh

R K Handoo, Yogesh Sharma, Vanshdeep Dalmia, Rahul Meena

16 May 2014

ORDER

Vinay Kumar Mathur, Chairperson

[1] We have heard Shri R.K. Handoo Ld. Counsel for the appellants and Shri Rahul Meena, Legal Consultant representing Enforcement Directorate on the application of the appellants under proviso to sub-Section (2) of Section 19 of FEMA for condonation of delay in filing the appeal beyond prescribed limitation. We have carefully perused the record. Since all the appeals arise out of the same adjudication order and raise common grounds and are connected, therefore the applications for condonation of delay in all the appeals are being decided by a common order. Brief facts relevant for consideration in the matter are that the appellant in appeal No. 397/2005 was released foreign currency amounting to US$ 9,15,058.11, for importing edible oil. It is alleged that the appellant company was obliged to furnish export control copy of the bill of entry within three months from the remittance of the said foreign exchange to the bank which issued the said currency. It is alleged that the bank which was also the authorised dealer was not furnished exchange control copy of the bill of entry. Therefore, it is contended that the appellants have contravened Section 8(3) and 8(4) read with Section 50 of FERA, 1973. The Special Director on 21.5.2002 issued memorandum to the appellant and also to its directors Bishan Swaroop Gupta, Raj Kumar Gupta, Prem Kumar Gupta and Manoj Kumar Gupta asking them to show cause as to why proceedings under Section 51 of FERA read with sub Section (3) and (4) of Section 49 of FEMA be not initiated against them. The Special Director vide his order dated 25.9.2003 found the appellant and the directors guilty of contravention of the said provisions and imposed a penalty of Rs. 3 crores on the appellant M/s. Raj Solvex Ltd. Under Section 50 of the FERA and also imposed penalty of Rs. 75 lakhs each on all its directors (appellants herein) to whom notices were issued. The Adjudicating Officer in his order has observed that the show cause notices were returned undelivered with a remark that the company had closed long back and the notice was served upon noticee Raj Kumar Gupta and Bishan Swaroop Gupta, Managing Director on 27.7.2002 and a reply was filed on 12.08.2002 enclosing photo copies of the bill of entry. It has also been observed by the Adjudicating Officer in his order under challenge that the Managing Director had stated in his reply that the company had submitted the bills of entry to the bank however the Adjudicating Officer imposed the penalty on the ground that no evidence from the bank had been filed confirming that bill of entry had been submitted to the bank.

[2] Aggrieved from the order of Adjudicating Officer appeals were filed before this Tribunal under Section 19 of the FEMA along with an application for condonation of delay. However, vide its order dated 05.02.2007, this Tribunal dismissed the appeals holding that the prescribed period of filing appeal of 45 days from the receipt of the order could only be extended upto a period of 90 days under Section 52(2) of FERA and since the total period had exceeded 90 days therefore, the delay could not be condoned.

[3] It appears that the appellant and the directors preferred Writ Petition (C) No. 3353 of 2008 in the Hon'ble Delhi High Court challenging the order of the Tribunal. However, the writ petition was dismissed by the Hon'ble High Court on 08.9.2010 on the ground that the remedy of filing an appeal under Section 35 of FEMA was available to the appellants and the writ petition was not tenable. The petitioner and the board of directors filed five appeals before the Hon'ble Delhi High Court which in its judgment dated 9th January, 2014 observed that the appeal before the Tribunal was required to be dealt with under Section 19 of the FEMA and the Tribunal could have entertained the appeals even after expiry of 45 days from the receipt of the order of the Adjudicating Authority if it was satisfied that there was sufficient cause for not filing the appeal within the aforesaid 45 days period. It further observed that there was no upper cap on the delay which could be condoned by the Appellate Tribunal in the event of its being satisfied that there was sufficient cause for not filing the appeal within the prescribed period. The Hon'ble High Court further observed in its judgment that the Tribunal ought to have considered the application of the appellants for condonation of delay in filing the appeals on merits instead of dismissing them on the ground that the delay beyond 45 days from the prescribed period could not be condoned by it. In this view the Hon'ble High Court while setting aside the impugned order of this Tribunal dated 05.2.2007 has remanded back the matter to the Tribunal for the disposal of the application of condonation of delay on merit and in case the delay is condoned, to decide the appeals on merit. Parties have been given liberty to raise all points urged in the writ petition before this Tribunal also.

[4] The appellants in their applications dated 28.4.2005 supported by affidavit have contended that M/s. Raj Solvex Ltd. is managed by Gupta family and upto October 2004 Shri Bishan Swaroop Gupta was the Managing Director of the company who fell seriously ill in October 2004 and in his absence Shri Prem Kumar Gupta other brother of Shri Bishan Swaroop Gupta started looking after the affairs of the appellants. It is further contended that Shri Prem Kumar Gupta, learnt about the impugned order on or about 08.11.2004 for the first time and immediately wrote a letter on 08.11.2004 to State Bank of Hyderabad requesting it to send the bills of entries submitted by the appellant to RBI. It is further stated that the matter could not be followed up due to serious illness of Shri Bishan Swaroop Gupta who passed away in December, 2004. It is also stated that the main business of the family had already closed leading to financial crunch. Thereafter, another brother of Shri Prem Kumar Gupta also fell ill who also died in March, 2005 and yet another brother developed heart disease and underwent by-pass surgery. It is contended that the impugned order came to the knowledge of the appellants from 08.11.2004 and due to the above reasons the appeal could not be filed within 45 days of 08.11.2004. It has also been stated that there is no deliberate delay and due to reasons beyond control of the appellant the delay has occurred. In case the delay is not condoned, the appellant will suffer irreparable injury. Though no formal written objection against the application for condonation of delay has been filed by the respondent, however, written submissions by Shri Rahul Meena, Legal Consultant have been filed on 22.4.2014

[5] Ld. Counsel for the appellants has submitted that Hon'ble Delhi High Court while dismissing of the appeals in its judgment dated 09.01.2014 has categorically held that irrespective of the fact that the Adjudicating Officer had passed the order with reference to the violation of provisions of FERA, the appeal is tenable under Section 19(2) of FEMA alone and the provisions of Section 52(2) of FERA cannot be imported and in this view the delay even beyond 90 days on showing sufficient and convincing grounds can be condoned by this Tribunal. Further, submission is that the appellants have not violated any provision of FERA and had in fact filed export control copy of the bills of entry within three months from the date of remittance of the foreign exchange to the bank which had issued the aforesaid foreign exchange but it appears that the bank somehow misplaced the copies filed by the appellant and did not furnish the required information to the RBI. Prima facie it is evident from the copies of the communication between the appellant and State Bank of Hyderabad, Chandni Chowk Branch Delhi wherein the bank has acknowledged receipt of the bill of entry submitted by the appellant to it within time and has also admitted that the same could not be reported to RBI by the bank as the copy had been misplaced. Due verification was also obtained by the bank from Customs Department. Copies of the entire correspondence with the bank has been filed by the appellant so as to prima facie prove its bonafides. Further submission is that a pragmatic and liberal approach should be taken by this Tribunal. In view of the fact that there was no deliberate delay on the part of the company or any of its directors, however due to circumstances beyond control slight delay has occurred in filing the appeals. The impugned order is arbitrary, exparte and against the law and as such is not sustainable. The penalty wrongly imposed is excessive and has been imposed without any legal justification. The dispute in this view should be decided on merits in the interest of justice.

[6] Ld. Legal Consultant while defending the impugned order has submitted that the appellants had failed to submit necessary documentary evidence evidencing the import. There is a delay of 126 days which does not deserve to be condoned. Further submission is that the language of the application is vague and the grounds taken are not supported by any evidence. The appellants have avoided mentioning the exact dates of events and also the name of the brother of Shri Prem Kumar Gupta and the exact relationship. It is also contended that the order of the Special Director is well reasoned and the appellants have not come before this Tribunal with clean hands. There are latches on the part of the appellants. Liberal approach should not be adopted in every case. Reliance has been placed upon Amlendu Kumar Bera and Anr. Vs. State of West Bengal, 2013 4 SCC 52, Basawraj and Ors. Vs. Special Land Acquisition Officer, 2013 10 SCALE 391 in which judgments reported in : 2002 AIR(SC) 100 and : 2002 AIR(SC) 1201 have also been referred. It has also been forcefully argued that since the adjudication was under FERA the appeal under Section 52(2) could not have been entertained after the expiry of 90 days from the date of imposition of penalty under Section 50 and the earlier order of this Tribunal was correct. The Hon'ble High Court has permitted to raise all the grounds which parties took before the High Court. This Tribunal has no power to condone the delay beyond 90 days and the delay has not been sufficiently explained.

[7] Hon'ble High Court in its judgment dated 09.01.2014 has held that the appeal before the Tribunal was required to be dealt with under Section 19 of FEMA and the Tribunal could have entertained the appeals even after expiry of 45 days from the receipt of the order of the Adjudicating Officer/Authority if it was satisfied that there was sufficient cause for not filing the appeal within the aforesaid 45 days period. Thus in view of the categorical finding of the Hon'ble Delhi High Court to the effect that the appeals ought to have been dealt with under Section 19 of FEMA negates the argument of Ld. Legal Consultant that the appeal under Section 19 of FEMA is not entertainable and instead should have been filed under Section 52(2) of the erstwhile FERA. In view of the findings of the Hon'ble High Court, this Tribunal can condone the delay beyond the period of 45 days from the receipt of the order of Adjudicating Officer provided it is satisfied that there was sufficient cause for not filing the appeal within the aforesaid period. It has been contended on behalf of the appellants/applicants that Shri Bishan Swaroop Gupta, the Managing Director of the company fell seriously ill in October 2004 and in his absence Shri Prem Kumar Gupta brother of Shri Bishan Swaroop Gupta started looking after the affairs of the company who learnt about the impugned order on or about 08.11.2004 for the first time and thereafter wrote a letter on the same day to State Bank of Hyderabad, Chandni Chowk Branch, Delhi asking the bank to send the bills of entries submitted by the appellant company to RBI. It has also been contended that the business of the family had already closed and proceedings under BIFR were pending and in the meanwhile yet another brother of Shri Prem Kumar Gupta died in March 2005 and another brother had to undergo by-pass surgery. Therefore, in these circumstances, the appeal could not be filed in time. The appellants have filed copies of correspondence with the State Bank of Hyderabad wherein the bank has acknowledged the receipt of bills of entries submitted by the appellant company to it at its counter in the Branch, however the originals could not be traced and a confirmation was sought from the Customs Authority and after confirmation relevant information was sent by the bank to the RBI. All these facts have not been denied by the respondents and are uncontroverted. The application for condonation of delay is supported by an affidavit. It is true that exact dates of events or name of the brother of Shri Prem Kumar Gupta who fell ill has not been disclosed in the application and there is a delay of about 126 days in preferring the appeals. However, we are satisfied that the facts and reasons given by the appellant in his application explaining the delay appear to be convincing. In view of the fact that the grounds for condonation of delay are uncontroverted and prima facie there appears to be substance in the contention that the export control copy of the bills of entry appear to have been filed in the bank within time. In this view of the matter, relying on the case laws cited by Ld. Legal Consultant it is a fit case where a liberal and pragmatic approach should be adopted in the interest of justice so that the dispute between the parties may be decided on merits. In view of the above discussion, the applications for condonation of delay are allowed. The appeals be registered accordingly. List on 25th June, 2014 for further proceedings.

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