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A.K.L. Labbai Thambi Maraicar Vs. the Government of India, Enforcement Directorate, Represented by Deputy Director of Enforcement and ors. - Court Judgment

LegalCrystal Citation
SubjectFERA
CourtChennai High Court
Decided On
Reported in(1982)2MLJ59
AppellantA.K.L. Labbai Thambi Maraicar
RespondentThe Government of India, Enforcement Directorate, Represented by Deputy Director of Enforcement and
Excerpt:
.....is not in dispute that though the appellant originally denied the receipt of the amount through a person in india on the instructions given by a person residing in singapore in his subsequent statement he has clearly admitted that he has received the amounts through persons in india on the instructions of his co-brother, s. ibrahim residing at singapore, and his second statement contains a clear admission that he has committed the violation complained of in the show cause notice. in view of the said statement the authorities below are right in holding that the violation complained of in the show cause notice has been established. once the explanation is not found to be applicable in respect of the violation complained of under section 9(1)(b) the further contention advanced by the..........of those violations.2. on information that the appellant has received certain payments from a person in india under instructions from a person resident abroad the appellant was summoned to appear before the chief enforcement officer. he gave a statement that two sums of rs. 2,000 and rs. 3,000 were received by him by sale of paddy and denied that the said amounts received by him represented payments received under instructions from a person residing abroad. as the statement given by him was found not satisfactory on enquiry, again he was summoned to appear on 3rd march, 1976 and on that date he gave a statement that his co-brother s.m. ibrahim working in singapore as a clerk in a shop represented to him in september, 1973, that he has arranged to send a sum of rs. 2,000 by means of.....
Judgment:
ORDER

G. Ramanujam, J.

1. The appellant herein is aggrieved against the order dated 5th October, 1979 of the Foreign Exchange Regulation Appellate Board which affirmed the order dated 9th March, 1976 of the Assistant Director of Enforcement holding the appellant guilty of contravention of Section 5(1)(aa) and Section 9(1)(b) of the Foreign Exchange Regulation Act, 1947 and 1973 respectively and levying a penalty of an aggregate sum of Rs. 15,000 in respect of those violations.

2. On information that the appellant has received certain payments from a person in India under instructions from a person resident abroad the appellant was summoned to appear before the Chief Enforcement Officer. He gave a statement that two sums of Rs. 2,000 and Rs. 3,000 were received by him by sale of paddy and denied that the said amounts received by him represented payments received under instructions from a person residing abroad. As the statement given by him was found not satisfactory on enquiry, again he was summoned to appear on 3rd March, 1976 and on that date he gave a statement that his co-brother S.M. Ibrahim working in Singapore as a clerk in a shop represented to him in September, 1973, that he has arranged to send a sum of Rs. 2,000 by means of bank draft sent by a person in India, that he received the bank draft from a person in India and credited the same in his bank account on 19th September, 1973. He also stated that he received two similar drafts for Rs. 2,000 and Rs. 1,000 in February, 1974 and May, 1974 respectively in the same manner under instructions from S.M. Ibrahim at Singapore through unknown persons in India and that the said amounts were spent by him for maintaining the family of S.M. Ibrahim who were staying with him. In view of the said subsequent statement wherein the appellant has admitted that he has received a sum of Rs. 2,000 in September, 1973, and a sum of Rs. 2,000 in February, 1974, and a further sum of Rs. 1,000 in May, 1974. under instructions from his co-brother S.M. Ibrahim of Singapore through bank drafts drawn by persons in India, two show cause notices dated 3rd March, 1976, were issued to the appellant for contravention of Sections 5(1)(aa) and 9 (1)(b) of the Foreign Exchange Regulation Act, 1947 and 1973, respectively for having received the various amounts referred to above from a local person other than an authorised dealer in foreign exchange without the general or special exemption from the Reserve Bank of India. The appellant filed his objections on 3rd March, 1976, requesting the adjudicating authorities to decide the case on 3rd March, 1976, itself since it would be difficult for him to go over to Madras again in connection with the case from his native prace. Accordingly the case was adjudicated on 3rd March, 1976. The Assistant Director of Enforcement gave a personal hearing to the appellant and during the personal hearing, he had admitted the contravention of the provisions of the Foreign Exchange Regulation Act, 1947, to the extent of Rs. 2,000 and the provisions of the Foreign Exchange Regulation Act, 1973, to the extent of Rs. 3,000. He further pleaded that the contravention was out of ignorance of law and that the transgression was unintentional. The Assistant Director of Enforcement, after perusal of the records and the statements made by the appellant both before and at the time of the personal hearing, found that the appellant had contravened Section 5(1)(aa) of the 1947 Act for having received a sum of Rs. 2,000 and Section 9(1)(b) of the 1973 Act for having received two payments amounting to Rs. 3,000 and that the receipt of the amounts by the appellant cannot be said to be due to ignorance of law especially when he has suppressed the truth in his original statement dated 20th December, 1975, and therefore it is not a fit case for extending any lenient treatment. For the said violations an aggregate penalty of Rs. 15,000 was levied.

3. The appellant took the matter in appeal and the Foreign Exchange Regulation Appellate Board found that the finding of the Assistant Director of Enforcement is based on the appellant's own statement dated 3rd March, 1976, wherein he has clearly admitted the contravention and therefore the finding cannot be assailed in the appeal. As regards the quantum of penalty the Board was of the view that the penalty levied was not excessive and, therefore, there is no justification for reducing the penalty.

4. In this appeal which is directed against the Appellate Board's order, the following three contentions have been raised by the learned Counsel for the appellant : (1) On the materials on record the charge of contravention of Section 5(1)(aa) of the 1947 Act and Section 9(1)(b) of the 1973 Act cannot be said to have been established and, therefore, the finding that the appellant is guilty of contravention of those provisions cannot be legally sustained. (2) Though the sum of Rs. 2,000 had been received on 19th September, 1973, in respect of such receipt action has to be taken only under the 1973 Act and the show cause notice in respect of that receipt based on the violation of the provisions of the 1947 Act cannot be legally sustained. (3) As regards the receipts in February and May, 1974, they will not amount to violation of the provisions of Section 9(1)(b) of the 1973 Act as the Explanation to that section cannot be applied as the Department has not proved that there is no inward payment as contemplated in that Explanation.

5. So far as the first contention is concerned, it is not in dispute that though the appellant originally denied the receipt of the amount through a person in India on the instructions given by a person residing in Singapore in his subsequent statement he has clearly admitted that he has received the amounts through persons in India on the instructions of his co-brother, S.M. Ibrahim residing at Singapore, and his second statement contains a clear admission that he has committed the violation complained of in the show cause notice. He also states in his subsequent statement that he has received the amount in ignorance of the law and therefore he must be leniently treated. In view of the said statement the authorities below are right in holding that the violation complained of in the show cause notice has been established. The learned Counsel for the appellant contends that in these cases the appellant received cheques through banks which are authorised by the Reserve Bank of India to deal in foreign exchange and therefore, there is no violation of either Section 5(1)(aa) of the 1947 Act and Section 9(1)(b) of the, 1973 Act. According to the learned Counsel wherever the receipt of money is in the form of a cheque that will not attract the above provisions. However, the learned Counsel has overlooked the fact that the cheque in these cases has been drawn on a local bank by a person in India. It has not been shown that the appellant's co-brother residing in Singapore had sent the amount through banks which is an authorised channel, in which case it could be said that the money came through authorised channel and therefore there is no violation. The show cause notice in this case proceeds on the basis that on the instruction of his co-brother at Singapore a third party drew a cheque and handed over the cheque to the appellant instead of bringing the cash and giving it to the appellant, he had brought a cheque drawn on some local bank and gave it to the appellant. This cannot be said to be in the nature of the amount being transmitted from the appellant's co-brother from Singapore to the appellant residing in India. In this view of the matter, the finding of the authorities below that the appellant has committed violation of Section 5(1)(aa) cannot be interfered with.

6. On the second question that in respect of the violation that has taken place before the 1973 Act came into force the 1947 Act cannot be invoked as the said Act has been repealed, we are of the view that Section 6 of the General Clauses Act, has been made specifically applicable by Section 81(3) of the 1973 Act and if Section 6 of the General Clauses Act, is applied, then even in respect of offences committed under the 1947 Act action could be initiated under the 1947 Act as if the 1973 Act has not come into force. Even if the 1947 Act has been repealed, it should be taken to survive in respect of offences which had taken place when the old Act was in force in view of Section 81(3) of the new Act. We have already taken, this view in C.M.A. No. 288 of 1980 batch wherein exactly a similar question arose. Following the said judgment we hold that the provisions of the old Act have rightly been invoked by the authorities below in respect of the violation of foreign exchange regulation committed by the appellant in September, 1973, when the old Act was in force.

7. Now we come to the third contention that in respect of the receipt of the two amounts of Rs. 2,000 and Rs. 1,000 in February and May, 1974, respectively the charge under Section 9(1)(b) cannot be taken to have been duly established. The Explanation to Section 9(1)(b) as found in the 1973 Act is as follows:

Explanation : For the purpose of this clause, where any person in, or resident in, India receives any payment by order or on behalf including an authorised dealer without a corresponding inward remittance from any place outside India, then such person shall be deemed to have received such payment otherwise than through an authorised dealer.

According to the learned Counsel for the appellant though Section 9(1)(b) containing the above Explanation restricts the application of the provision in Section 9(1)(b) only to receipts without a corresponding inward remittance from any place outside India, a close reading of the Explanation shows that it is intended to cover cases of payments received by order or on behalf of an authorised dealer in which case further proof that the receipt was without a corresponding inward remittance from any place outside India is necessary. In this case the Explanation does not come into play for the amount has not been received by order or on behalf of an authorised dealer. Here the amount has been received on instructions from a person outside India and the same has not been received by the appellant by order or on behalf of any authorised dealer. Once the Explanation is not found to be applicable in respect of the violation complained of under Section 9(1)(b) the further contention advanced by the learned Counsel for the appellant that in respect of the violations complained of under the new Act the Explanation also should be satisfied does not arise. All the three contentions therefore fail and the civil miscellaneous appeal is dismissed. There will, however, be no order as to costs.


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