JYOTSNA HOLDING PRIVATE LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) This appeal will also dispose of Letters Patent Appeal No. 70 of 1990 as both the appeals involve common questions of fact and law. These appeals are directed against the orders dated 28th September, 1990 passed by the learned Single Judge of this Court whereby the applications of the respondents under Section 54 of the Foreign Exchange Regulations Act, 1973 (hereinafter called 'FERA') were allowed and the delay in filing the appeals was condoned. It would be sufficient to give in brief the facts in M/s. Jyotsna Holding Private Ltd. v. Union of India, that is Letters Patent Appeal No. 71 of 1990 as the arguments were advanced in this appeal by counsel for the parties.

(2.) The appellant company was appointed for rendering consultancy service to M/s. Somito Corporation, Japan (hereinafter referred to as 'SC') in the matter of supplies contemplated to be made by SC to M/s. Oil and Natural Gas Commission/Gas Authority of India Ltd. Two agreements dated 30th August, 1984 and 5th December, 1984 were executed between the appellant company and SC. The appellant company was entitled to receive consultancy fee from SC. The consultancy fee was to be remitted in Japanese Yens to the account of Bank of Credit & Commerce International, London on account of Eljay Consultants Incorporated. The agreement also provided that in case the contract is cancelled partially or wholly due to reasons other than the fault of SC the consultancy fee paid by SC to the appellant company corresponding to the cancellation amount will be paid back by the appellant company to SC. From the information gathered through the Income Tax Department it was revealed that income approximately to the tune of Rs. 6.35 crores was earned by the appellant company by way of consultancy fee in terms of the two agreements and the SC had remitted the amount in US Dollars to the Bank of Credit & Commerce International, London in account of 'Lijay' and that these amounts were repatriated to India through banking channels in September 1987.

(3.) On 23.9.1988 show cause notice was issued to the appellant company by respondent No. I wherein it was alleged that the appellant and its Directors were guilty of violating Sections 8(1). 14 and 47 (1) of FERA. The notice was duly replied on 5.10.1988 and the allegations were denied. In adjudication proceedings the Special Director observed that the circumstances rule out the possibility of the existence of mensrea or the guilty intention on the part of the company or its Directors. All the same he held that there was technical breach of Sections 8 (1), 14 and 47 (1) of FERA. He exonerated the Directors of the compapy but imposed penalty on the appellant company. In appeal before the Board, the Board accepted the plea of the appellant company to the effect that the amounts (foreign exchange) could not immediately be remitted in terms of the agreement as there was a possibility of the same being repaid to SC and was repatriated at the earliest opportunity. It was an admitted fact that the entire foreign exchange earned by the appellant company stood repatriated to India about a year prior to the issue of show cause notice. The Board took into consideration all these factors and came to the conclusion that there was no breach or violation of the aforesaid proyisions of FERA and consequently allowed the appeal by order dated 17th July, 1989. The order was communi- cated to the respondents which was admittedly received on 21st July, 1989.