Latest news with #ForeignExchangeRegulationAct
Hindustan Times
2 days ago
- Business
- Hindustan Times
Citizens abroad for the long term are non-residents under FERA: HC
MUMBAI: The Bombay high court on Wednesday observed that persons staying abroad with no clear intention of returning to India would be treated as 'persons resident outside India' under the Foreign Exchange Regulation Act (FERA), and upheld a penalty of ₹ 1.4 crore against a family which purchased a huge amount of shares from an Indian company without prior appeal to the Reserve Bank of India (RBI). (Shutterstock) The case dates back to the mid-1990s, when a series of share transactions was carried out by the Shroff family and its company Sujay Trading Corporation Pvt Ltd. The Enforcement Directorate (ED) on November 18, 1999, had served the family with a notice, stating that Shroff's daughters, who were residents of the United States, had purchased shares worth ₹ 16 lakh from a Mumbai-based company called Ditco Securities Pvt Ltd without taking prior approval from the RBI as prescribed under FERA. Remarking that the daughters were 'persons resident outside India' under FERA, the ED stated that they were married in the US and had been settled there for a few years. Highlighting their lack of intention of returning to India permanently and the purchase of shares from an Indian company without the RBI's approval resulted in the ED penalising them on October 30, 2000. The three daughters were charged an amount of ₹ 41 lakh each, ₹ 25.8 lakh was levied on their father, and ₹ 8.5 lakh on Sujay Trading Pvt Ltd, which was run by the parents. Aggrieved by this, the Shroff family approached the Appellate Tribunal for Foreign Exchange, which upheld the conclusions reached by the ED and dismissed the appeals on November 18, 2005. Subsequently, the family appealed in the Bombay high court in 2006, challenging the orders passed by the ED and the appellate tribunal. The family contended that the daughters were not 'persons resident outside India' but were students pursuing their higher studies in the US. Therefore, there was no need for them to obtain permission from the RBI for the purchase of shares in an Indian company. Based on this defence, they submitted that there was no violation of any of the provisions of FERA. Highlighting the clear intentions of the Shroff daughters to settle in the US, the ED clarified that it had taken the decision after evaluating the relevant documents. It stated that the penalties imposed on the Shroffs were proportionate to the economic offence, and were legally sound. The division bench of Justices M S Sonak and Jitendra Jain upheld the decision of the ED and the appellate tribunal and observed that the daughters' prolonged stay in the US clearly reflected their intention to permanently settle abroad, thereby establishing them as 'persons resident outside India'. It held that the evidence, such as their marriage and their continued stay outside India since the 1980s, corroborated their intentions. The court further stated that merely holding an Indian citizenship or a student visa did not exempt them from the provisions of FERA. With no exemptions proven by the family, the bench held that there was no error in the findings by the authorities and upheld the penalties. 'Considering the magnitude of the transactions and the circumstances in which the same were carried out, there is no substance in the argument based on any alleged disproportionality in the penalty amounts, ' it added.
India.com
3 days ago
- Business
- India.com
Emergency forced exit of Coca-Cola, IBM, Kodak and Mobil, but gave birth to…
(File/Representational) In 1977, after the Emergency and the rise of nationalist economic agenda led to the exit of Coca-Cola, IBM, Kodak and Mobil, were forced to leave from India. Their forced departures were not only business decisions but also linked to ideological battle. Absence of these global giants led to a shift in consumer tastes and gave birth to local competitors. 1973 Regulation After the Foreign Exchange Regulation Act (FERA) of 1973 which mandated that foreign companies dilute their equity to 40% and, in certain sectors, reveal proprietary technologies and trade secrets, it changed parameters for many foreign companies. Coca-Cola, IBM, Kodak, Mobil Exit: It was asked to share its secret formula so they decided to exit. IBM was not able to give control of its technology so they left India. Kodak and Mobil found the regulatory and ownership challenges they did the same thing. By 1978, over 50 multinationals announced to leave the Indian market. Birth Of Thums Up After Coca-Cola's exit there was no specific cold drink in the Indian market. Parle Products found the opportunity over here. Thums Up was their soft drink which started taking this space. It was an Indian flavour profile. Even the Campa Cola came with a tagline 'The Great Indian Taste'. Even the government tried to introduce their own soft drink named as 'Double Seven', The name was derived from the Janata Party's year of electoral victory. When Coca-Cola returned in 1993, the market was changed. What they did first was to acquire Thums Up and Limca for $60 million.
Business Recorder
25-04-2025
- Business
- Business Recorder
Forex & appeal rules: SC dismisses federation's plea
ISLAMABAD: The Supreme Court held that the condition under 23C(4) of the Foreign Exchange Regulation Act, 1947 (FERA) and rule 8 of the Adjudication Proceedings and Appeal Rules, 1998 for filing an appeal against the decision of adjudicating officer is not justified and infringed upon the fundamental rights. A five-judge constitutional bench of the Supreme Court, headed by Justice Aminuddin Khan, decided the matter on the federation's appeal against the Lahore High Court (LHC) order. The bench maintaining the LHC order dismissed the federation's appeal. Senior Joint Director Foreign Exchange Operations Division SBP (respondent No 8) had filed a petition before the Lahore High Court, challenging the vires of Section 23C (4) of the Foreign Exchange Regulation Act, 1947 (FERA) and rule 8 of the Adjudication Proceedings and Appeal Rules, 1998. The petition was allowed by means of order dated 01.02.2023 and struck down the said provision of FERA and rule 8 of the Rules as unconstitutional. The federation then approached the Supreme Court. Averting due adjudication: LHC declares SBP's Circular No 2 as unlawful Under section 23C of the FERA, a decision of the adjudicating officer, made under section 23B(4) is though appealable before the Foreign Exchange Regulation Appellate Board, but it shall not be admitted for hearing unless the appellant deposits in cash with the Appellate Board the amount of penalty or, at the discretion of the Appellate Board, furnishes security equal in value to such amount of penalty, as provided by its subsection (4). The main controversy for determination is whether the pre-condition of deposition of the amount of penalty for admission of an appeal as provided by section 23C(4) of the FERA and rule 8 of the Rules, is constitutional. The judgment said that an unreasonable condition could make it impossible or unfairly difficult to exercise the right to appeal. Similarly, conditions that obstruct the normal and fair functioning of the due process for an appellant, such as, the payment of excessive amount could be considered as unreasonable. It said there is no justification for deposition of such an excessive amount nor has it been shown that the condition attached to the appeal is with due regard to the public requirement. Directing a party to deposit the total amount of the subject matter, before admission of his appeal would be unreasonable, resulting into preventing that party from exercising his right of appeal, which violates his fundamental right of fair trial and due process, guaranteed by Article 10A of the Constitution. If permitted, this will not only deprive the respondents from their fundamental right of challenge to the decision of the executive authority before an independent and impartial higher forum, but will also give a license to the powerful executive to misuse its authority. The condition of deposition of the fine amount imposed by subsection (4) of section 23C of the FERA is so excessive and unreasonable that it would amount to denial of the right to appeal, which violates Article 10A of the Constitution, hence, cannot sustain. The judgment noted that there is always a possibility of error, mistake of facts or law in a decision at the level of initial forum, therefore, the right of appeal is a substantive right of an aggrieved person. It existed since the establishment of judiciary, with its primary function to protect against miscarriage of justice. A right of access to justice and a right to a fair trial and due process is a fundamental right of a citizen, guaranteed by Article 10A of the 1973 Constitution, which includes an appeal to a higher, independent and impartial forum to scrutinise the decision of the fora below. The court noted that the denial of right of appeal violates the fundamental rights of a citizen, the principles of natural justice and the injunctions of Islam. Copyright Business Recorder, 2025
Express Tribune
25-04-2025
- Politics
- Express Tribune
No preconditions to right to appeal
A constitutional bench of the Supreme Court has disapproved attaching any condition with the right of appeal and declared it a violation of fundamental rights. "Unreasonable conditions attached to an appeal would likely be one that is not justified, disproportionate or infringed upon the fundamental rights or the legal process. An unreasonable condition could make it impossible or unfairly difficult to exercise the right to appeal," reads a five-page judgement authored by Justice Jamal Khan Mandokhail. He was hearing an appeal filed by Senior Joint Director Foreign Exchange Operations Division against Lahore High Court which had declared that section 23C (4) of the Foreign Exchange Regulation Act, 1947 (FERA) and rule 8 of the Adjudication Proceedings and Appeal Rules,1998 are unconstitutional. A five-judge bench of the constitutional bench led by Justice Aminuddin Khan heard the matter. "Similarly, conditions that obstruct the normal and fair functioning of the due process for an appellant, such as, the payment of excessive amount could be considered as unreasonable," the judgment adds. "There is no justification for deposition of such an excessive amount nor has it been shown that the condition attached to the appeal is with due regard to the public requirement." Under section 23C of the FERA, a decision of the Adjudicating Officer, made under section 23B(4) is though appealable before the Foreign Exchange Regulation Appellate Board (Appellate Board), but it shall not be admitted for hearing unless the appellant deposits in cash with the Appellate Board the amount of penalty or, at the discretion of the Appellate Board, furnishes security equal in value to such amount of penalty, as provided by its subsection (4). The main controversy for determination is whether the pre-condition of deposition of the amount of penalty for admission of an appeal as provided by section 23C(4) of the FERA and rule 8 of the Rules, is constitutional. The judgement notes that there is always a possibility of error, mistake of facts or law in a decision at the level of initial forum, therefore, the right of appeal is a substantive right of an aggrieved person. "It existed since the establishment of judiciary, with its primary function to protect against miscarriage of justice. A right of access to justice and a right to a fair trial and due process is a fundamental right of a citizen, guaranteed by Article 10A of the constitution, which includes an appeal to a higher, independent and impartial forum to scrutinize the decision of the fora below.
Express Tribune
24-04-2025
- Business
- Express Tribune
CB shields right of appeal from preconditions
Listen to article A constitutional bench of the Supreme Court has disapproved attaching any condition with the right of appeal and declared it a violation of fundamental rights. "Unreasonable conditions attached to an appeal would likely be one that is not justified, disproportionate or infringed upon the fundamental rights or the legal process. An unreasonable condition could make it impossible or unfairly difficult to exercise the right to appeal,' reads a five-page judgement authored by Justice Jamal Khan Mandokhail. He was hearing an appeal filed by Senior Joint Director Foreign Exchange Operations Division against Lahore High Court which had declared that section 23C (4) of the Foreign Exchange Regulation Act, 1947 (FERA) and rule 8 of the Adjudication Proceedings and Appeal Rules,1998 are unconstitutional. A five-judge bench of the constitutional bench led by Justice Aminuddin Khan heard the matter. 'Similarly, conditions that obstruct the normal and fair functioning of the due process for an appellant, such as, the payment of excessive amount could be considered as unreasonable,' the judgment adds. 'There is no justification for deposition of such an excessive amount nor has it been shown that the condition attached to the appeal is with due regard to the public requirement.' Under section 23C of the FERA, a decision of the Adjudicating Officer, made under section 23B(4) is though appealable before the Foreign Exchange Regulation Appellate Board (Appellate Board), but it shall not be admitted for hearing unless the appellant deposits in cash with the Appellate Board the amount of penalty or, at the discretion of the Appellate Board, furnishes security equal in value to such amount of penalty, as provided by its subsection (4). The main controversy for determination is whether the pre-condition of deposition of the amount of penalty for admission of an appeal as provided by section 23C(4) of the FERA and rule 8 of the Rules, is constitutional. The judgement notes that there is always a possibility of error, mistake of facts or law in a decision at the level of initial forum, therefore, the right of appeal is a substantive right of an aggrieved person. "It existed since the establishment of judiciary, with its primary function to protect against miscarriage of justice. A right of access to justice and a right to a fair trial and due process is a fundamental right of a citizen, guaranteed by Article 10A of the constitution, which includes an appeal to a higher, independent and impartial forum to scrutinize the decision of the fora below. "It plays a role to review very carefully, to interpret and apply law in most accurate and uniform manner within the limits of legal procedure, in order to eliminate a slightest instance of miscarriage of justice. "Denial of right of appeal violates the fundamental rights of a citizen, the principles of natural justice and the injunctions of Islam." The judgement further notes that the Constitution guarantees that every person enjoys the protection of law and is to be treated in accordance with law, therefore, no clog, condition or restriction should be imposed by a simple act or law on a fundamental right conferred upon him by the Constitution, except in specific situation and according to due process, only in the larger interest of public. "The authority of the Parliament to legislate is derived from the Constitution, which must be consistent with and in accordance with the Constitution. Any enactment, a part of it or amendment introduced in it, if inconsistent or in violation of any provision of the Constitution, shall to the extent of such inconsistency or violation, be void. It is well settled that the right of appeal derives through a Statute. "The Constitution does not restrict the Legislature to impose conditions or restrictions, while granting the right of appeal. However, those conditions or restrictions must be with due regard to the public requirement and reasonable. Making a fundamental right subject to any clog, condition or restriction, contrary to the constitutional provisions or beyond the parameters of reasonableness, would be violative of the fundamental rights guaranteed by the Constitution." "Unreasonable conditions attached to an appeal would likely be one that is not justified, disproportionate or infringed upon the fundamental rights or the legal process. "An unreasonable condition could make it impossible or unfairly difficult to exercise the right to appeal. Similarly, conditions that obstruct the normal and fair functioning of the due process for an appellant, such as, the payment of excessive amount could be considered as unreasonable. 'There is no justification for deposition of such an excessive amount nor has it been shown that the condition attached to the appeal is with due regard to the public requirement. 'Directing a party to deposit the total amount of the subject matter, before admission of his appeal would be unreasonable, resulting into preventing that party from exercising his right of appeal, which violates his fundamental right of fair trial and due process, guaranteed by Article 10A of the Constitution. "If permitted, this will not only deprive the respondents from their fundamental right of challenge to the decision of the executive authority before an independent and impartial higher forum, but will also give a license to the powerful executive to misuse its authority. 'The condition of deposition of the fine amount imposed by subsection (4) of section 23C of the FERA is so excessive and unreasonable that it would amount to denial of the right to appeal, which violates Article 10A of the Constitution, hence, cannot sustain", says SC while upholding the LHC judgement. Meanwhile, Justice Shakeel Ahmad in his additional note stated that it is trite that the legislature is sovereign within its domain of law-making, but this sovereignty is not unfettered. "The legislature cannot enact any provision whatsoever which is inconsistent with, or violative of fundamental rights enshrined in the Constitution. Any such provision must be tested on the touchstone of constitutionality and struck down if found to be inconsistent with fundamental rights", he added.
