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7. Appearing on behalf of the Respondents, Mr. A.S. Chandhiok, the learned Additional Solicitor General of India submitted that the complaint made under Section 16(3) FEMA by the ED before the Special Director stated that the ICICI Bank by its letter dated 26th June 2002 informed the Reserve Bank of India (RBI) that the total dues to it from JTS was Rs. 1073 million. As per the XOX Statement for the half-year ended 30th June 2002 the JTS had export outstanding of Rs. 261,69,37,180/- comprising of 226 GRs. According to him, therefore, even as on that date, the full value of the export proceeds were yet to be recovered and the contravention which perhaps began when the FERA was in force „continued‟ even after the FEMA was enacted. It was akin to a continuing offence.

However, during arguments, learned counsel for the Petitioners confined his submissions to the first question.

10. The facts on the basis of which the ED has proceeded are set out in detail in the complaint enclosed with the show cause notice dated 10th August 2004. The complaint itself acknowledges that JTS was a 100% export-oriented unit (EOU) located at the Madras Export Processing Zone, Tambaram, Chennai and had been exporting the computer hard disk drives to the US. JTS was a wholly owned subsidiary of M/s JTS Corporation, USA. The complaint states that as per the statement of the half yearly ended as on 30th June 2002, JTS had an export outstanding of Rs. 261.69 crores comprising of 226 GRs. JTS is shown to have had five bankers. Of these, the Exim Bank informed the RBI that JTS had only availed a term loan and had no export outstanding with them. The ICICI Bank informed the RBI that Rs. 1073 million was owed to it by JTS "towards loans extended". The State Bank of Travancore informed the RBI that "JTS was defunct", and that the letters addressed to the company had been returned undelivered by the postal authorities. Indian Bank too by a letter dated 11th September 2000 informed the RBI that "JTS had closed down their operations since 1998-99" and that the company was evicted in 1999. Even the RBI informed the ED that letters sent to JTS at its Mumbai address were returned undelivered. By letter dated 7th December 2003 the State Bank of Travancore informed that the export outstanding of JTS was Rs.152.95 crores in respect of 175 GRs. By the letter dated 10th December 2002 the SBI, Overseas Branch, Chennai informed that there were 8 outstanding bills aggregating Rs. 8.57 crores. However, both of them maintained that the letters sent to JTS were returned undelivered with the remarks "company closed". The further letter of 10th January 2003 of the State Bank of India, Overseas Branch, Chennai also confirmed that the eight bills for a total amount of Rs. 8.57 crores pending realization in respect of exports made by JTS were during the year 1997-98.

11. Although the letters from the banks pursuant to the clarification sought by the ED are dated later than 31st May 2002, the said letters mention export outstanding in the account of JTS for the period 1997-98. The mere fact that the statement of accounts for the half yearly ended as on 30th June 2002 showed export outstandings does not extend the limitation for proceeding against the JTS and its directors for contravention of Section 18 FERA 1973 beyond the sunset period as set out in Section 49 (3) FEMA. The complaint itself refers to the letters of the various banks which state that JTS had ceased its operations in 1999 itself. The above details unmistakably show that the exports in question were during the period 1997-98 and the contravention of Section 18 FERA due to the non- realisation of the export proceeds also pertained to the same period. Even according to the ED the non-realisation of the export proceeds did not pertain to any export later than 1997-98. At the given time, FEMA was not yet in force. There was therefore no question of the contravention of any provision of FEMA. The contravention if any was only of the provisions of FERA. However, the show cause notice dated 10th August 2004 and the complaint preceding it invoke only the provisions of Sections 7 and 8 FEMA read with Section 42 thereof and not the provisions of the FERA.