LAWS(KAR)-1999-6-67

WORLD WIDE TRADERS Vs. FOREIGN EXCHANGE REGULATION APPELLATE BOARD, MINISTRY OF LAW AND JUSTICE AND ANOTHER

Decided On June 18, 1999
World Wide Traders Appellant
V/S
Foreign Exchange Regulation Appellate Board, Ministry Of Law And Justice Respondents

JUDGEMENT

(1.) THE brief facts leading to this appeal and which are not in dispute are, that the appellant is a registered firm carrying on business in export of readymade garments to various countries out of India. During the course of transactions, the appellant exported readymade garments to certain foreign countries like M/s. Annick Mesh & Stitches, West Germany, M/s. J.P.G. Seige, Paris, M/s. Paradox Sports, Canada and M/s. P & C Factoring, Netherlands. These companies inspite of various reminders sent by the appellant, failed to make payments to the appellant for the goods received by them. Hence, the books of accounts of the appellant showed certain amounts as outstanding from these companies. The appellant sought permission of the Reserve Bank of India to waive the receipt of the said amounts from the foreign buyers as non -recoverable amounts, having taken steps to recover the same and that two foreign buyers had gone into liquidation. After issuing show cause notice dt. 15.4.88 the Directorate of Enforcement at Chennai initiated proceedings against the appellant not accepting the written explanation dt. 6.10.88. In that proceedings, the appellant was directed to pay a sum of Rs. 1,51,000. The appeal preferred by the appellant to the Foreign Exchange Regulation Appellate Court in Appeal No. FERB 524/89 came to be dismissed confirming the order passed by the enforcement authority. Hence the appeal.

(2.) HEARD .

(3.) REPELLING these arguments very strongly, Sri Ashok Haranahalli, the learned Sr. Central Government Standing Counsel submitted that any delay in realising the amount beyond the prescribed period is an offence under SECTION 18(2). Goods viz. readymade garments were exported by the appellant on 25.2.83. The appellant had sent only telex message and letters in between 8.6.83 and 11.2.84. The respondent initiated proceedings by the end of 1986. Only thereafter, on 15.2.86 the appellant wrote to the Councilor, that means from 15.2.84 till 15.2.86, nothing was done by the appellant. They should have informed the RBI after the declared period. They failed to take legal proceedings to recover the amount. Therefore, the claim that they could not take any action as the buyer company was liquidated is only a ruse to escape their liability. Further, his submission that taking into consideration the object of the Act and the purpose for which the enactment was made proves that mens rea is not necessary. He also argued that the appeal itself is not maintainable as it does not satisfy the requirement of Section 54 of the Foreign Exchange Regulation Act, 1973, (herein after referred as 'the Act'). In support of this argument, he relied on a decision reported in Oriental Investment Co. Ltd. Vs. Commissioner of Income Tax, Bombay, AIR 1957 SC 852 . Therefore, he argued that the appeal is liable to be dismissed.