Case: Allana Sons Private Limited Vs. Foreign Exchange Regulation Appellate Board

(1), also that the sale of the goods is delayed to an extent which is unreasonable having regard to the ordinary course of trade :"provided that no proceedings in respect of any contravention of the provisions of this sub-section shall be instituted unless the prescribed period has expired and payment for the goods representing the full export value has not been made in the prescribed manner within the prescribed period. "( 22 ) THE case of the Department appears to be alleged contravention by the appellants of section 18 (2) (A) (a) (ii) in that where any export of goods has been made, no person shall except with the permission of the Reserve Bank, do or refrain from doing anything or take or refrain from taking any action which has the effect of securing. . . that payment for the goods is delayed beyond the period prescribed under Clause (a) of sub-section (1 ).( 23 ) IT is strongly urged by Shri Karmali that the appellants have not contravened the provisions of section 18 (2) of the FERA inasmuch as they have neither done nor refrained from doing anything and neither they did nor refrained from taking any action which had the effect of securing the payment of the said goods delayed beyond the prescribed period for its recovery. Shri Karmali also pointed out the finding of the Appellate Board as it appears in paragraphs 12 and 13 of the impugned order. It would be useful to reproduce the said finding:"12. I have considered the rival contentions of the parties. Events have taken place in an unforeseen manner and quite contrary to normal practices and one does not expect the carrier to deliver the goods to a consignee without proper documents and contrary to instructions. The Shipping Corporation of India was directed to unload the consignments of the appellants and to give delivery to the consignees without taking a proper security for the value of the goods so delivered. To this extent, I agree that the appellants were helpless in the matter. 13. However, considering the facts and circumstances of the case in its entirety and the fact that the appellants were the victims of the action of certain third parties, I feel a lenient view is called for regarding the penalty. ">( 24 ) ON the other hand, the learned Government Pleader took the stand that where the value of exported goods has not been repatriated to our country within the specified period, it is for the exporter to explain bona fides and the steps taken by him in securing repartition within the specified period. The party would be in the wrong if the delay in securing repatriation is beyond the specified period and would be guilty of contravention of section 18 (2) (A) (a) (ii) of the FERA. ( 25 ) IN the facts and circumstances which have been narrated by us in detail and which facts are not in dispute and to some extent the finding of the FERA Board also indicates that in fact the appellants despite due diligence were helpless in the matter. The events have taken place in an unforeseen manner and quite contrary to normal practice and as found by the Appellate Board the appellants were the victims of actions of certain third parties. ( 26 ) THIS has obvious reference to the telex messages exchanged between the BFDC and the Shipping Corporation of India as well as the Shipping Corporation of India and the local agent of Meka Trading Co. The contravention of section 18 (2) of the FERA would have occurred only for some volition on the part of the exporter in either doing or refraining from doing an act or either taking or refraining from taking an action. Obviously, therefore, from the phraseology as obtaining in section 18 (2) main part would indicate not only volition but some deliberate action or a deliberate act of refraining from taking any steps which results in securing one of the two modes of payment i. e. either not in accordance with the prescribed manner or being delayed beyond the prescribed period under Clause (a ). But if events occur which are beyond the ordinary control of the party and which despite diligence or bona fides the exporter would not have been able to secure payment within the specified period, in our opinion, there would be no contravention of section 18 (2) of the FERA. The present circumstances appear to indicate a helpless situation and a helpless party where we cannot visualise any contravention of section 18 (2) of the FERA. At any rate even assuming that there was a presumption that the appellants have failed to secure the payment within the prescribed time, the said presumption is rebuttable and the facts on record clearly show that the appellants have taken all reasonable steps to realise and recover payments and not only that, they had filed civil suit long before the department even thought of show-cause proceedings. This is, therefore, not a case where the party can be branded as guilty of contravention of section 18 (2 ). The documents of the transaction, the conditions of transfer and in particular the instructions that under the said Bill of Lading the cargo of Allana Sons was to be delivered to the order of Bank of Sadarat Iran, Iranshahr, Snomali Branch and the party to be notified was Meka Trading Co. , shows that the exporters had taken all necessary precautions for realising the foreign exchange in the value of the goods through banking channel. It is only because of the action of the third parties which have immoveablised them from proceeding further in recovering the foreign exchange directly and have been constrained to file civil suit for damages against the BFDC and the Shipping Corporation of India. In the result, therefore, the impugned judgment of the Appellate Board and that of the Adjudicating Authority will have to be quashed and set aside. Proceedings in show-cau

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]( 25 ) IN the facts and circumstances which have been narrated by us in detail and which facts are not in dispute and to some extent the finding of the FERA Board also indicates that in fact the appellants despite due diligence were helpless in the matter. The events have taken place in an unforeseen manner and quite contrary to normal practice and as found by the Appellate Board the appellants were the victims of actions of certain third26 ) THIS has obvious reference to the telex messages exchanged between the BFDC and the Shipping Corporation of India as well as the Shipping Corporation of India and the local agent of Meka Trading Co. The contravention of section 18 (2) of the FERA would have occurred only for some volition on the part of the exporter in either doing or refraining from doing an act or either taking or refraining from taking an action. Obviously, therefore, from the phraseology as obtaining in section 18 (2) main part would indicate not only volition but some deliberate action or a deliberate act of refraining from taking any steps which results in securing one of the two modes of payment i. e. either not in accordance with the prescribed manner or being delayed beyond the prescribed period under Clause (a ). But if events occur which are beyond the ordinary control of the party and which despite diligence or bona fides the exporter would not have been able to secure payment within the specified period, in our opinion, there would be no contravention of section 18 (2) of the FERA. The present circumstances appear to indicate a helpless situation and a helpless party where we cannot visualise any contravention of section 18 (2) of the FERA. At any rate even assuming that there was a presumption that the appellants have failed to secure the payment within the prescribed time, the said presumption is rebuttable and the facts on record clearly show that the appellants have taken all reasonable steps to realise and recover payments and not only that, they had filed civil suit long before the department even thought ofproceedings. This is, therefore, not a case where the party can be branded as guilty of contravention of section 18 (2 ). The documents of the transaction, the conditions of transfer and in particular the instructions that under the said Bill of Lading the cargo of Allana Sons was to be delivered to the order of Bank of Sadarat Iran, Iranshahr, Snomali Branch and the party to be notified was Meka Trading Co. , shows that the exporters had taken all necessary precautions for realising the foreign exchange in the value of the goods through banking channel. It is only because of the action of the third parties which have immoveablised them from proceeding further in recovering the foreign exchange directly and have been constrained to file civil suit for damages against the BFDC and the Shipping Corporation of India. In the result, therefore, the impugned judgment of the Appellate Board and that of the Adjudicating Authority will have to be quashed and set aside.