UNION OF INDIA versus ABN AMRO BANK AND OTHERS

Citation: [2013] 13 S.C.R. 820 · Decided: 12-07-2013 · Supreme Court of India · Bench: K.S. RADHAKRISHNAN · Disposal: Appeal(s) allowed
Open in Lexace · Ask the AI about this case
Judgment (excerpt)

[2013] 13 S.C.R. 820 
A 
UNION OF INDIA 
v. 
ABN ·AMRO BANK AND OTHERS 
(Criminal Appeal No. 975 of 2007) 
B 
JULY 12, 2013 
[K.S. RADHAKRISHNAN AND DIPAK MISRA, JJ.) 
Foreign Exchange Regulation Act, 1973: 
·~ + 
c 
ss.19(1)(a), and (d), 29(1)(b), 47(1) and 49(1)(a) rlw. s.68 
- Contravention of - Prosecution for - Alleging the company 
and its foreign share-holder (holding 51% shares of the 
Company) for carrying out business/trading activities of 
imported gold coins, in contravention of above provisions -
D Accused found guilty for contravention of the provisions by 
_.i, 
Adjudicating Authority - Appellate Tribunal set aside the 
order of Adjudicating Authority - High Court upheld the order 
of appellate authority refusing to interfere with it on the ground 
that no questions of law arose for its consideration -
On 
E appeal, held: The trading activity of the company was without 
due approval under 19(1)(a) and (d) and 29(1)(b) -
The 
company was not covered under the Notification relaxing the 
provisions of ss. 19 and 29(1)(b). 
~ 
F 
Doctrine -
Doctrine of 'Lifting of corporate veil' -
Applicability of, in cases of violation of provisions of Foreign 
Exchange Regulation Act. 
-
Interpretation of Statutes - 'Heading' of a provision - As 
G an aid to interpretation of the provision - Held: Heading of a 
'1--~ 
section can be regarded as a key to the interpretation of the 
operative portion of the section - If the language in the 
Section is plain, clear and unambiguous, the heading 
strengthens that meaning. 
H 
820 
• 
UNION OF INDIA v. ABN AMRO BANK 
821 
The respondent Nos. 2 to 4 were charged for carrying · A 
out business/trading activities of 'imported Maple Leaf 
Gold Coins' in contravention of ss. 19(1 )(a) and (d), 
29(1 )(b), 47(1 ), 49(1 )(a) r/w. s.68 of Foreign Exchange 
Regulation Act, 1973. Proceedings were also initiated 
against respondent No.1-Bank for violation of s.6 (4) and 
B 
"(5) of the Act alleging that the Bank sold gold coins to the 
company without being reasonably satisfied about the 
nature of the business of the Company and without 
ascertaining whether the Company had got necessary 
permission from RBI in dealing with gold coins, and thus c 
the Bank misused the permission granted to it by RBI for 
importing gold coins. The Adjudicating authority found 
the respondents guilty of the offences they were charged 
with. The appeals against the order of adjudicating 
authority was allowed by Appellate Tribunal for Foreign 
0 
Exchange. High Court dismissed the appeal filed u/s. 54 
of the Act, on the ground that neither any question of law 
nor any legal infirmity was found in the order passed by 
the Tribunal. 
In appeal to this Court, the respondents 2 to 4 
E 
. contended that respondent-Company was an Indian 
Company under Indian Companies Act, 1956 consisting 
of Indian shareholders as well as Directors, and such 
Company having foreign shareholdings did not need 
permission from RBI to carry on business or to establish 
F 
a place of business in India; that the respondent-Swiss 
Company cannot be said to have violated s. 29(1 )(a) and 
indirectly tried to establish a place of business in India 
merely because the Swiss Company held 51% shares of 
the Company and initiated its incorporation; that by virtue 
G 
of Foreign Exchange Regulation Amendment Act 29 of 
1993, an Indian company in which non-resident interest 
is more than 40% can carry on business in India without 
any permission from RBI, that the company fell squarely 
within the category of "newly setup trading company 
H 
822 
SUPREME COURT REPORTS 
[2013] 13 S.C.R. 
I ,. 
A primarily engaged in export" which fell within the purview 
y. 
' 
' 
of the general permission granted by RBI under the 
~ 
automatic approval route and hence there was no 
contravention u/ss. 19(a) and (d), 29(1 )(b) or 49(1 )(a) of the 
Act, and that while interpreting a statute, courts would lift 
B the corporate veil more restrictively and FERA was not 
expected to lift the veil under Section 29(1 )(a) after the 
amendment Act of 1993. 
The appellant contended that section 29(1 )(a) puts an 
~ .. 
c injunction on the foreign companies and foreign 
nationals from establishing or carrying on any business 
~ 
in India or opening any branch in India without obtaining 
the permission of the RBI; that the Company was a 
foreign Company set up by foreign nationals in violation 
D 
of s. 29(1 )(a); that the Adjudicating Authority rightly lifted 
the co
Excerpt shown. Read the full judgment & AI analysis in Lexace.