WALL STREET FINANCE LTD. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) AS per facts on records, which are relevant for the purposes of disposing of the present appeal, the appellant is a Full Fledged Money Changer (hereinafter referred to as FFMC). For the said purpose, they have a proper licence issued by the Reserve Bank of India from the year 1991 -92, in terms of the provisions of Section 7 of the Foreign Exchange Regulations Act, 1973. The said licence stands renewed by the RBI from time to time. In terms of the said licence, the appellant is permitted to stock and sell VISA Brand Travellers' Cheque (hereinafter referred to TC's) of Arab Financial Services. They have the proper permission from RBI to sell said brand TCs to other FFMCs in India.

(2.) FOR the above purpose, they entered into an agreement with M/s. Time Travel and Cargo (hereinafter referred to as TTC), on 21/03/97, appointing them as their sub agent for stocking and selling TCs of VISA brand. The said M/s. TTC is duly licensed to operate as FFMC by RBI. In terms of the said agreement, blank stock of TCs were to be issued by the appellants to TTC at any given time within the overall limit agreed. The TCs so received by TTC were to be sold by them as per the terms and conditions of the licence granted to them as FFMC by RBI and as per the guidelines and instructions given in the memorandum of instructions issued by RBI from time to time. The appellants also informed the RBI about appointing of TTC as their sub agent and claimed that if the facilities by other FFMCs are miss -used by them, the appellants is not responsible for the same, inasmuch as the RBI is the only authority to monitor such use or misuse of the TCs. Various clauses in the agreement entered by the appellants with TTC also elaborated that TTC would sell such TCs to genuine passengers only against the purchase agreement forms (hereinafter referred to as PAF). The agreement also contained a clause containing caution about money laundering. The settlement between the appellants and TTC, as regards the consideration for the sold TCs was to be made by TTC an weekly basis daily settlement advice. It is also seen that before entering into the agreement, TTC furnished security of Rs. 55.5 lakhs to the appellants in terms of fixed deposit by one of the partners of TTC, Shri Riyaz Retiwala. Thereafter, the appellants started selling foreign currency in the shape of Travelers' Cheque to the said TTC.

(3.) DURING the month of May 97, to be precise on 26/05/97, the appellants sold TCs of VISA brand, totally amounting to US 1.90,000 to TTC for stock and sale. The said TCs were further sold by TTC on the same date itself and the sale proceeds thereof were deposited in cash in the bank account of TTC. Out of the said sale proceeds of TCs, two Pay Orders of Rs. 58 lakhs and Rs. 10 lakhs were procured by them in the name of the appellants and given to the appellants on 28/05/97. The said pay order was deposited by the appellants in their bank and at the relevant point of time of dispute was lying in the hands of the Bank.