Delhi District Court
Enforcement Directorate vs M/S Nitex Overseas & Others on 9 April, 2018
Case No. 18973/2016
Enforcement Directorate
vs.
M/s Nitex Overseas & Others
JUDGMENT
a. ID No. of the case 18973/2016 b. Date of commission of offence Between 1994 to 1998
c. Date of institution of the case 16.04.2002 d. Name of the complainant Sh. C. N. Dhar, Chief Enforcement Officer, Enforcement Directorate, New Delhi e. Name & Address of the accused 1. M/s Nitex Overseas F-90/33, Okhla Industrial Area Phase-I, New Delhi - 110020.
2. Harmanjit Singh Partner of M/s Nitex Overseas, R/o 287, Sant Nagar, East of Kailash, New Delhi - 110020
3. Nilofer Singh Partner of M/s Nitex Overseas, R/o 287, Sant Nagar, East of Kailash, New Delhi - 110020 f. Offence complained off Section 56 of FERA Act, 1973 g. Charge framed Section 56 of FERA Act, 1973 h. Plea of accused Pleaded not guilty and claimed trial i. Arguments heard on 20.03.2018 j. Final order Convicted k Date of Judgment 09.04.2018
1. Allegations are that the Accused No. 1 affected shipment of goods valued at Rs. 2,76,68,198/- under GR Forms during the year 1994 to 1998. Details of GR Forms are as under:
Sl. No. GR Form No. Amount Outstanding
1. AD - 498614 3,31,948
2. AS - 784971 13,17,288 Enforcement Directorate vs. Page No. 1 of 14 M/s Nitex Overseas & Others
3. AH - 602056 4,39,017
4. AA - 664134 4,48,500
5. AC - 110572 7,57,350
6. AF - 548529 90,000
7. AJ - 025378 2,27,448
8. AH - 602008 481297
9. AH - 602015 294690
10. AH - 602013 1438087
11. AH - 697979 294690
12. AH - 697981 250867
13. AH - 110737 90000
14. AH - 697972 260125
15. AH - 697982 85208
16. AJ - 814905 79515
17. AJ - 814928 63180
18. AI - 798400 200610
19. AJ - 688712 665393
20. AJ - 688719 443265
21. AJ - 688713 388032
22. AJ - 688707 257390
23. AJ - 688702 216179
24. AJ - 688298 274719
25. AJ - 688289 274719
26. AJ - 688281 225516
27. AJ - 688288 274719
28. AJ - 688284 88648
29. AJ - 688269 420295
30. AJ - 814939 540080
31. AJ - 814938 578812
32. AJ - 814951 60858
33. AJ - 814940 498855
34. AJ - 814904 144256
35. AJ - 814948 144256
36. AJ - 814947 144256 Enforcement Directorate vs. Page No. 2 of 14 M/s Nitex Overseas & Others
37. AJ - 814950 129830
38. AJ - 814911 837988
39. AJ - 814927 451325
40. AJ - 814965 24664
41. AJ - 814968 26543
42. AJ - 814999 266364
43. AH - 602040 60170
44. AH - 602027 142785
45. AH - 602039 41314
46. AH - 602051 231365
47. AH - 602064 4750
48. AJ - 227206 36590
49. AK - 709691 474837
50. AK - 709676 478837
51. AJ - 227207 98560
52. AJ - 227208 46100
53. AJ - 227212 68474
54. AH - 602092 202473
55. AH - 602093 936400
56. AJ - 764803 43324
57. AJ - 764846 374880
58. AJ - 764847 74976
59. AJ - 764848 18744
60. AJ - 764849 468600
61. AJ - 764850 28116
62. AJ - 764852 28116
63. AJ - 764863 468600
64. AJ - 765842 62707
65. AJ - 764881 188220
66. AJ - 764866 88725
67. AJ - 764853 23872
68. AM - 948554 38329
69. AJ - 764900 84722
70. AG - 784838 1808536 Enforcement Directorate vs. Page No. 3 of 14 M/s Nitex Overseas & Others
71. AG - 784990 861994
72. AG - 849950 103254
73. AM - 563153 309287
74. AM - 563147 115540
75. AM - 563140 193522
76. AM - 563947 309287
77. AM - 563141 115540
78. AM - 563139 193522
79. AM - 563169 183596
80. AM - 563155 46055
81. AM - 563180 61734
82. AM - 563154 578527
83. AM - 563157 232260
84. AM - 563156 696780
85. AM - 563176 347323
86. AM - 563173 92520
87. AM - 563175 521168
88. AM - 563174 397994
89. AM - 563172 448300
90. AM - 563171 282327
91. AM - 563177 1366785
92. AM - 563170 143707
93. AJ - 81943 50715
2. Accused No. 1 namely M/s Nitex Overseas without permission of RBI took, or refrained from taking, such actions which led the effect of securing the export value to the tune of Rs. 2,76,68,198 within the prescribed period or within the time extended by the RBI. An Opportunity Notice dated 05.11.2001 was served upon the accused persons by way of affixation, but the accused persons Enforcement Directorate vs. Page No. 4 of 14 M/s Nitex Overseas & Others failed to produce any permission of RBI. Hence, accused No. 1 contravened Section 18(2) read with Section 18(3) of Foreign Exchange Regulations Act, 1973 (hereinafter referred as FERA), and thereby committed an offence punishable under Section 56 FERA read with Section 49(3) and Section 49(4) of Foreign Exchange Management Act, 1999 (hereinafter referred to as FEMA). Accused No. 2 & 3 were the partners of accused No. 1 during the relevant time.
3. Cognizance was taken by Ld. Predecessor Court on 16.04.2002 and all the three accused persons were summoned. Section 207 Cr. P. C. was complied.
4. Complainant led pre-charge evidence as per Section 244 Cr. P. C. During the pre-charge evidence, complainant has examined four witnesses. A gist of their statements is as under:
a) PW-1 Sh. C. N. Dhar proved the complaint Ex. PW-
1/A and Notification vide which he was authorised to file the complaint, which is Ex. PW-1/B. During cross-examination, he deposed that he did not investigate the allegations levelled in the complaint.
b) PW-2 Sh. S. C. Adhlakha deposed that he had issued the Opportunity Notice to the accused persons. He proved the Opportunity Notice as Ex. PW-2/A. He also deposed that the Opportunity Enforcement Directorate vs. Page No. 5 of 14 M/s Nitex Overseas & Others Notice was served by way of affixation and accused persons did not produce any permission of RBI. He further deposed that accused No. 1 is a partnership firm and accused No. 2 & 3 are the partners of it. During cross-examination, he deposed that notice was issued to the accused persons on the basis of available record.
c) PW-3 Sh. Satpal deposed that the Opportunity Notice Ex. PW-2/A was handed over to him for service in the year 2002. He served the notice by way of affixation at the office address of accused persons and drew a panchnama Ex. PW-3/A and prepared his report Ex. PW-3/B. He further deposed that Opportunity Notice was also served by way of affixation at the residential premises of accused No. 2 & 3 on 18.02.2002 and proved panchnama Ex. PW-3/C and Ex. PW-3/D, as well as, reports Ex. PW-3/E and Ex. PW-3/F. During cross- examination, he deposed that the witnesses of panchnama had met him on the spot and he did not take any photograph of affixation.
d) PW-4 Sh. N. K. Suri, Assistant Manager, RBI deposed that on 31.12.2006, outstanding export from accused No. 1 was Rs. 23,70,124/-, however, this record was nil in the year 2007. He was not cross-examined by the accused persons.
Enforcement Directorate vs. Page No. 6 of 14 M/s Nitex Overseas & Others
5. Charge under Section 56 FERA, 1973 was framed against the accused No. 1 Nitex Overseas through its partners, accused No. 2 Harmanjit Singh and accused No. 3 Nilofer Singh for contravention of Section 18(2) read with Section 18(3) of FERA and the matter was fixed for post-charge evidence.
6. At the stage of post-charge evidence, PW-2 deposed on 28.11.2017 wherein he adopted his statement recorded at the stage of pre-charge evidence on 19.01.2007. During his cross-examination, he stated that all the documents were placed before him at the time of issuance of Opportunity Notice. He added that he did not remember to whom it has given for service by way of affixation by post as it was the work of Administration Section and added that he never went anywhere to investigate the matter of M/s Nitex Overseas and denied the suggestion that there was a letter from Syndicate Bank that all dues were cleared.
7. PW-3 Sh. Satpal appeared before the Court at the stage of post-charge evidence on 16.08.2017 and adopted his examination in chief recorded on 19.01.2007. During his cross-examination at the stage of post-charge evidence, he stated that he had been authorised by the Investigating Officer to serve the Opportunity Notice by hand to the accused persons on given address and after reached Enforcement Directorate vs. Page No. 7 of 14 M/s Nitex Overseas & Others factory address of the accused persons mentioned in the Opportunity Notice, he was informed by one guard that the accused persons were not available there and the guard refused to take the Opportunity Notice and thereafter pasted the Opportunity Notice on the gate of the given address and then he made the panchnama which showed the accused persons were not living there.
8. PW-4 Sh. N. K. Suri also appeared at the stage of post- charge evidence on 28.11.2017, wherein he adopted his statement recorded on 01.07.2008. During his cross- examination at the stage of post-charge evidence, he stated that the statement of outstanding amount had been received by him from other section of the Department of Foreign Exchange and denied that Ex. PW-4/A was not signed and added that it was signed by Assistant Manager of the Section and having seal of RBI FED. He also stated that the record was provided by Syndicate Bank, Nehru Place to RBI, FED.
9. Thereafter post-charge evidence was closed and matter was fixed for recording of statements of accused persons under Section 313 Cr. P. C.
10. During their statements under Section 313 Cr. P. C. accused No. 1, through its partners accused No. 2 & 3, stated that all the documents were submitted by their Enforcement Directorate vs. Page No. 8 of 14 M/s Nitex Overseas & Others bank before the appropriate authority and also submitted NOC from their bank i.e. Syndicate Bank to the concerned authority and also stated that no notice was served to them, either at their residence or office.
11. All the accused persons did not wish to lead any evidence in their defence and accordingly, defence evidence was closed. Thereafter, the matter was fixed for final arguments.
12. During final arguments, Ld. SPP for Enforcement Directorate argued that the accused persons had contravened Section 18(2) read with Section 18(3) of FERA, 1973 and had thereby committed an offence under Section 56 of FERA and it was also argued that the complainant has been able to prove its case.
13. On the other hand, it was argued by Ld. defence counsel appearing for all the accused persons that the outstanding amount had been paid and NOC had been obtained by Syndicate Bank, which was the banker of the accused persons.
14. I have heard the arguments on both the sides and perused the record.
15. In the present matter, the accused persons have been Enforcement Directorate vs. Page No. 9 of 14 M/s Nitex Overseas & Others sent for trial for the offence punishable under Section 56 of FERA for contravening Section 18(2) FERA. Section 18(2) FERA reads as under:
Sec. 18(2) - Where any export of goods, to which a notification under clause (a) of sub- section (1) applies, 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-- (A) in a case falling under sub-clause (i) or sub- clause (ii) of clause (a) of sub-section (1),--
(a) that payment for the goods--
(i) is made otherwise than in the prescribed manner, or
(ii) is delayed beyond the period prescribed under clause (a) of sub- section (1), or
(b) that the proceeds of sale of the goods exported do not represent the full export value of the goods subject to such deductions, if any, as may be allowed by the Reserve Bank; and (B) in a case falling under sub-clause (ii) of clause
(a) of sub-section (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.
16. Rule 8 to Foreign Exchange Regulations Rules, 1974 prescribed the time period within which payment from shipment of goods was to be secured. Rule 8 read as under:
Rule 8. Period within which export value of goods to be realised - The amount representing Enforcement Directorate vs. Page No. 10 of 14 M/s Nitex Overseas & Others the full export value of the goods exported shall be realised and be paid to the authorised dealer on the due date for payment or within six months from the date of shipment of the goods whichever is earlier:
Provided that, where the goods are exported to a warehouse established outside India with the permission of the Reserve Bank, the amount representing full export value of the goods exported shall be paid to the authorised dealer as soon as it is realised and in any case within fifteen months from the date of shipment of goods: Provided further that the Reserve Bank may, for sufficient and reasonable cause shown, extend the said period.
17. It is seen from perusal of the record that the accused persons are relying on the statements given by Assistant Manager, RBI, FD and that as per their records the export outstanding is nil for the half year ended on 30.06.2007 and 31.12.2007 in respect of accused company, M/s Intex Overseas which has written on document Ex. PW-4/A.
18. On the plain reading of the aforementioned statement, it has come on record that accused persons had obtained NOC therefore their Banker i.e. Syndicate Bank in the present case. It is seen from the perusal of the file that as per the complainant, the shipment of goods were made by the accused company through accused No. 2 Harmanjit Singh and accused No. 3 Nilofer Singh between the year 1994 to 1998. The present complaint was made by the complainant, Enforcement Directorate in the year 2002 and as per the testimony of PW-4, the outstanding payment against the shipment was due till 31.12.2006 Enforcement Directorate vs. Page No. 11 of 14 M/s Nitex Overseas & Others which is till 08 years after the last shipment.
19. On the bare reading of Section 18(2) and Rule 8 of FERA, it is clear that the payments due towards shipment of goods was to be realised on the due date of payment or within 06 months of payment, whichever is earlier. The outstanding payment till the year ended on 31.12.2006 were not made till date. It is pertinent to mention here that even if we peruse the noting of Assistant Manager, RBI FED made on Ex. PW-4/A, it appears that the export outstanding is 'NIL' for the half year ended on 30.06.2007 and 31.12.2007 in respect of the accused company M/s Nitex Overseas.
20. Furthermore, nothing has come on record on behalf of the accused persons either during cross-examination of the witnesses, which suggests that the accused persons had obtained permission from RBI and had sought extension of time for realising the export payment or even had made efforts to do so during the period 1994 to 1998.
21. The accused persons have also taken the defence that the Opportunity Notice has been served upon them. However, on the perusal of the testimony of PW-3 Sh. Satpal, it is seen that he has stated during his cross- examination that the Opportunity Notice was pasted on the given address which was the factory address and Enforcement Directorate vs. Page No. 12 of 14 M/s Nitex Overseas & Others panchnama was made which showed that accused persons were not living there.
22. The Opportunity Notice was served upon the accused persons at their official premises which was served by way of affixation. It has also come on record that as per the Panchnama Report Ex. PW-3/A, it had been stated that the accused persons had shifted from the aforementioned address and it was served by way of affixation on both the last known official, well as, residential addresses of the accused persons.
23. The defence has not been able to show that the complainant was aware that the accused persons were available at another address as has been the defence taken by them during the cross-examination of witnesses.
24. Accordingly, in view of the aforesaid facts and circumstances, it is seen that the complainant has been able to show that the payments due towards accused No. 1, namely, M/s Nitex Overseas, through accused No. 2 Harmanjit Singh and accused No. 3 Nilofer Singh was not realised within the prescribed period as per Rule 8 of FERA, 1974. It has also been proved by the complainant that accused No. 2 Harmanjit Singh and accused No. 3 Nilofer Singh were partners of the company and were responsible for its day-to-day affairs Enforcement Directorate vs. Page No. 13 of 14 M/s Nitex Overseas & Others and working of the company. Accordingly, accused No. 1 M/s Nitex Overseas, accused No. 2 Harmanjit Singh and accused No. 3 Nilofer Singh are hereby convicted for offences punishable under Section 56 of FERA, 1973.
Announced in the open (Gurmohina Kaur) Court on 09.04.2018 ACMM-01/New Delhi District Patiala House Courts, New Delhi Code: DL-0427 This judgment contains 14 pages and each page is signed by me.
(Gurmohina Kaur) ACMM-01/New Delhi District Patiala House Courts, New Delhi Code: DL-0427 Enforcement Directorate vs. Page No. 14 of 14 M/s Nitex Overseas & Others