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2001 DIGILAW 225 (CAL)

GRINDLAYS BANK P. L. C. v. UNION OF INDIA

2001-04-20

PRATAP KUMAR RAY

body2001
PRATAP KUMAR RAY,J. ( 1 ) IN the instant writ application the writ petitioners, namely, the Grindlays Bank and its two officers have assailed Memorandum No. T-4/1/ SU. 81 (SCN), dated 11-6-1981, issued by the Special Director, Enforcement Directorate (Foreign Exchange Regulation Act), Government of India, whereby the writ petitioners were directed to show cause as to why the adjudication under Section 23d of the Foreign Exchange Regulation Act, 1947 (the FERA, 1947), for violation of Section 10 (1) (a) of the FERA 1947, due to delay to repatriate the sum of Rs. 15,02,351 as determined by the income-tax authorities on reassessment of the earlier assessment as made finally relating to the assessment years 1949-50 to 1959-60 and the decision of holding 'adjudication proceeding' as contemplated under Section 51 of the Foreign Exchange Regulation Act, 1973, (FERA 1973) issued by the competent authority being dissatisfied with the reply of said memorandum. ( 2 ) RULE issued and interim order of injunction in terms of prayer (f) was passed ex parte on 10-8-1984, by A. K. Sengupta, J. till 15-9-1984, upon granting leave to the respondents to apply for variation, vacating the interim order. However, after the expiry of such interim order, by order dated 18-9-1984, A. K. Sengupta, J. allowed the interim order as earlier passed to continue until further orders. In view of such, the entire proceedings has been kept pending. The affidavit-in-opposition, has been filed by the respondent No. 3, the Reserve Bank of India (RBI) but no affidavit-in-opposition has been filed by the respondent Nos. 1 and 2, namely, the Union of India and the Special Director of Enforcement under the Foreign Exchange Regulation Act, Affidavit-in-reply has been filed by the writ petitioners. ( 3 ) THE facts of the writ petition are to this effect. The writ petitioner-bank is running the business of banking all over the world having its head office at London. There are different branches in different countries including the one here in India. ( 3 ) THE facts of the writ petition are to this effect. The writ petitioner-bank is running the business of banking all over the world having its head office at London. There are different branches in different countries including the one here in India. On account of head office expenses at London, the decision was reached by the banking authorities to distribute such expenses to the different banks situated all over the world on proportionate basis as per the formula : Territorial management expenses---------------------- x Head office general charges total Global management expenses ( 4 ) THE terms of such formula, were accepted as reasonable by a subsequent decision relating to the assessment year 1969-70 by the income-tax appellate authority as well as by the RBI. The RBI allowed the remittance of proportionate head office expenses allocated to India for each and every accounting year and the petitioner accordingly remitted the same. The concerned notice of adjudication proceeding relates to the accounting years from 1948 to 1964. On the basis of the said formula as accepted, the last remittance was allowed in the accounting year ended 31-12-1964. Such head office expenses allocated to India covering those periods were accordingly charged to the profit and loss account of the Indian business of the writ petitioner-bank and claimed in the income-tax computations as deductible expenses. ( 5 ) THE income-tax authorities did not raise any objection for such remittance. But for the first time, the income-tax authorities wanted a detailed break-up of head office expenses in relation to the accounting year, 1959, corresponding to the assessment year 1960-61. For the first time, the ITO disallowed a sum of Rs. 3,28,366 representing contributions to unrecognised provident fund, pension fund and on contribution to charities and donation relating to the head office expenditure. In appeal, such disallowance was reduced to Rs. 86,728 only. In view of such disallowance resorting to a changed formula from the earlier year as accepted, the assessments for the assessment years 1949-50 and 1959-60 were reopened under Section 148 of the Income-tax Act, 1961 on diverse dates in the year 1965-66. ( 6 ) BY order dated 25-3-1966, the ITO disallowed a portion of head office expenses on account of pension, provident fund and charity, etc. , which had been previously allowed relating to those assessment years. ( 6 ) BY order dated 25-3-1966, the ITO disallowed a portion of head office expenses on account of pension, provident fund and charity, etc. , which had been previously allowed relating to those assessment years. An appeal was preferred and the AAC by the decision dated 1-4-1967, reduced such disallowances in respect of each of the years in question between 27-2-1966, and 30-3-1966, in respect of the assessment years 1960-61 and 1965-66. The ITO disallowed a portion of the amounts claimed as deductible expenses on account of proportionate head office expenses allocated to India on the same principle. On appeal, however, such amount was reduced in respect of each year concerned by the appellate authority. The ITO gave effect to the orders passed by the appellate authority i. e. , Asstt. Commissioner, as arose relating to the reassessment years 1949-50 to 1959-60 and the assessment relating to the assessment years 1960-61 to 1965-66, by his orders dated 10-5-1967 and 6-7-1967, respectively. ( 7 ) IN pursuance of such revised orders, the sum of Rs. 9,82,342 relating to the assessment years 1949-50 to 1959-60 and a sum of Rs. 5,20,007 relating to the assessment years 1960-61 to 1965-66 being in total Rs. 15,02,351 was disallowed. It is a portion of head office expenses as was earlier allowed not only by the income-tax authorities following the formula as was prevalent earlier but which had the permission of the RBI relating to remittance of the said amount. ( 8 ) HOWEVER, as a result of such income-tax proceedings by way of reassessment, on the basis of the changed formula by disallowing the head office expenses on account of provident fund, pension fund and charities, etc. , as earlier mentioned, refund was made by the Income-tax Department, and the same was credited by the writ petitioner to its taxation reserve account. However, the writ petitioner did not take steps to repatriate those amounts from the head office at London but subsequently the RBI by a letter dated 28-12-1974, made advice to repatriate, those amounts from the head office. Such letter of the RBI was on the basis of information given by the income-tax authorities relating to the years 1948 to 1964. The writ petitioner-bank made a reply to the letter of the RBI by the communication dated 3-1-1975, informing that a decision was awaited from the head office at London on that issue. Such letter of the RBI was on the basis of information given by the income-tax authorities relating to the years 1948 to 1964. The writ petitioner-bank made a reply to the letter of the RBI by the communication dated 3-1-1975, informing that a decision was awaited from the head office at London on that issue. However, on 21-1-1975, the said amount of Rs. 15,02,351 was debited to the account of the head office maintained at Calcutta, and the communication was made to the RBI on 20-1-1975, to this effect that the said amount would be debited on 21-1-1975. But despite such, the impugned memorandum dated 11-6-1981, was served upon the writ petitioners only on the reason that the writ petitioners delayed to repatriate the amount though the said amount was disallowed long back in the year 1967 by final reassessment order in pursuance of the appeal as filed by the bank in question to the appellate authority of income-tax. ( 9 ) BY the impugned memorandum, violation of rule 10 (1) (a) of the FERA 1947, has been taken as a ground, for show-cause notice on the said facts. The petitioner had shown cause of the notice being the memorandum dated 11-6-1981, on giving details of the facts as happened, pointing out, inter alia, that there was no violation of the said Section 10 (1) (a ). However, the Special Director of Enforcement formed an opinion on perusal of the said cause as shown that it was a fit case to issue show-cause notice for issue of adjudication proceeding under Section 51 of the FERA 1973, being Section 23 (d) of the repealed Act, FERA 1947. ( 10 ) HENCE, challenging both the aforesaid memorandum as well as the decision to show cause as to why adjudication proceeding would not be initiated, the present writ application has been filed. It is submitted by the learned advocate for the petitioners that in view of the special facts of the case, there was no violation of Section 10 (1) (a) of the FERA 1947, and accordingly, the impugned memorandum is without jurisdiction. Further, it is contended that before coming to a decision as to why adjudicating proceedings should not be commenced, a decision by the authority exercising quasi-judicial function, there ought to have been subjective satisfaction on the points as taken in the reply of the impugned memorandum on 11-6-1981. Further, it is contended that before coming to a decision as to why adjudicating proceedings should not be commenced, a decision by the authority exercising quasi-judicial function, there ought to have been subjective satisfaction on the points as taken in the reply of the impugned memorandum on 11-6-1981. But, in the instant case, no such satisfaction was reached but a show-cause notice has been issued, which is in violation of the principles of natural justice. It is further contended that once permission was granted by the RBI upon a proper clearance of the income-tax authorities relating to remittance of expenditure on account of head office expenses in pursuance of a decision as was acceptable by the concerned respondents, for change of such formula by a subsequent decision in the year 1976, by reassessment of the income-tax, it cannot saddle the writ petitioners with the liability for violation of the provision as alleged. ( 11 ) IT is further contended that any act which was lawful when done, cannot be said to be unlawful by a subsequent decision on the changed formula of distribution of head office expenses of London of the concerned bank. It is contended that when the earlier formula of distribution of head office expenses of London was changed, there was no delay to repatriate the same after the RBI advised such, as immediately on issuance of such letter, the amount has been debited to the account of head office maintained at Calcutta, on 21-1-1975. ( 12 ) IT is contended by the learned advocate of the RBI respondent No. 3 relying on the affidavit filed by the RBI to this effect that after the decision of the income-tax authorities, in the year 1967, the amount has been repatriated by way of debiting the same to the account of the head office maintained at Calcutta on 21-1-1975. ( 13 ) THE learned advocate of the respondent, the RBI, simply relied upon its affidavits to that effect. The learned advocate appearing for the respondent Nos. 1 and 2 has submitted vehemently against this writ petition, without affirming any affidavit. ( 13 ) THE learned advocate of the respondent, the RBI, simply relied upon its affidavits to that effect. The learned advocate appearing for the respondent Nos. 1 and 2 has submitted vehemently against this writ petition, without affirming any affidavit. It is contended by the learned advocate that there is violation of Section 10 (1) (a) of the FERA 1947, in view of the long delay to deposit the amount when already a final decision was reached by reassessment of the assessments of the relevant years long back in the year 1967. It is contended since 1967. The writ petitioner had the liability to repatriate the amount and they had done it by way of debiting the same in the account of the head office at Calcutta, only on 21-1-1975. So, there was a delay of about seven years and more and, hence, the provision of Section 10 (1) (a) of the FERA, 1947, is squarely applicable. It is further contended that challenging the memorandum, in the show-cause stage, when simply a notice has been issued as to why adjudication proceedings should not be initiated, the writ petitioner has come up to this court. Accordingly, the writ petition is not maintainable being premature. ( 14 ) CONSIDERING the rival contentions of the parties, the only point for decision is as to whether this writ court will interfere with the matter at this stage when admittedly adjudication proceedings have not reached finality and no penalty has been imposed. Furthermore, this court is not unmindful of the other provisions of the FERA, 1947, now on repeal, the FERA, 1973, whereby and wherein there is an Appellate Board under Section 52 of the FERA, 1973, and the order passed by the Adjudicating Officer under Section 51 of the said Act is appealable. Normally it is settled by different legal proposition that the writ court would not interfere when the matter is premature and will not stop any adjudicating proceeding or statutory enquiry, which is at the investigation stage. But in the instant case, there is a basic legal infirmity as to be revealed from interpretation of Section 10 itself of the FERA, 1947, now Section 16 of the FERA, 1973, which would justify the writ as maintainable. But in the instant case, there is a basic legal infirmity as to be revealed from interpretation of Section 10 itself of the FERA, 1947, now Section 16 of the FERA, 1973, which would justify the writ as maintainable. The entire lis now on the pivotal ring of interpretation of Section 10 of the FERA, 1947, qua the right of initiation of adjudicating proceedings under Section 23 of the FERA, 1947 now renumbered with some change as Section 51 of the FERA, 1973. For appreciation relevant Sections are quoted. Section 10 of the FERA, 1947, reads as follows :"duty of persons entitled to receive foreign exchange-- (1) No person who has a right to receive any foreign exchange or to receive from a person resident outside India a payment in rupees shall, except with the general or special 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) that the receipt by him of the whole or part of that foreign exchange or payment is delayed, or (b) that the foreign exchange or payment ceases in whole or in part to be receivable by him. (2) Where a person has failed to comply with the requirements of Sub-section (1) in relation to any foreign exchange or payment in rupees, the Reserve Bank may give to him such directions as appear to be expedient for the purpose of securing the receipt of the foreign exchange or payment as the case may be. " ( 15 ) SECTION 23 of the FERA, 1947, reads as follows :"penalty and procedure.-- (1) If any person contravenes the provisions of Section 4, Section 5, Section 9, Section 10, Sub-section (2) of Section 12, Section 17, Section 18a or Section 18b or of any rule, direction or order made thereunder he shall: (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided, or (b) upon conviction by a court, be punishable with imprisonment for a term which may extend to two years, or with both. " ( 16 ) THERE is no change of Section 10 of the FERA, 1947, in the new Act the FERA, 1973, whereby the section has been only numbered as 16. The basis of the memorandum impugned in this writ application is the violation of Section 10 (1) (a) of the FERA, 1947, on the ground that there was delay of more than seven years in repatriating the foreign exchange. The final grounds for such issuance of the memorandum in some paragraphs are as follows:"and whereas it appears from the said revised orders passed by the said Income-tax Officer on May 10, 1967, that disallowance of a sum of Rs. 9,82,342 in aggregate in respect of the assessment years 1949-50 to 1959-60 was sustained in appeals in addition to further disallowance of a sum of Rs. 5,20,009 in aggregate in respect of the assessment years 1960-61 to 1965-66, as per the revised orders passed by the said Income-tax Officer on July 6, 1967, resulting in a total disallowance of Rs. 15,02,351 out of head office expenses alleged to have been incurred by the London head office of the said bank which was shown wrongly to be attributable to the functioning of the said bank in India during the relevant period. And whereas it appears that the Indian branch of the said bank did or refrained from doing anything, or took or refrained from taking any action which had the effect of securing that the repatriation of Rs. 9,82,342 was delayed for a period of seven years eight months and ten days and repatriation of Rs. 5,20,009 was delayed for a period of seven years six months and fourteen days without the general or special permission of the Reserve Bank of India; And whereas it appears that by delaying the repatriation of a sum totalling Rs. 15,20,351 the Indian branch of the said bank contravened the provisions of Section 10 (1) (a) of FERA, 1947, and thereby rendered itself liable to be proceeded against under Section 23 (1) (a) of the said Act. " ( 17 ) THE adjudicating authority under the Act was not satisfied with the cause as shown wherein a categorical case was made out that as per direction of the RBI, the said amount was repatriated, irrespective of the ground that there was no reason for repatriation. " ( 17 ) THE adjudicating authority under the Act was not satisfied with the cause as shown wherein a categorical case was made out that as per direction of the RBI, the said amount was repatriated, irrespective of the ground that there was no reason for repatriation. ( 18 ) NOW the interpretation of Section 10 qua Section 23 now renumbered as Section 51 of the FERA, 1973, with reference to the present factual matrix, would decide the issue. Since the matter relates to an alleged cause of action of the year 1967, the relevant provision of the Act as existed on the material time is the deciding factor. At the material time, the FERA, 1947, was in vogue. Be it noted that the FERA, 1947, was originally enacted as a temporary measure and it was placed in the statute book by Act 39 of 1957 but there were several amendments and accordingly the outcome was the new Act, the FERA, 1973. Section 51 of the FERA, 1973, is corresponding to Section 23 (1) (a) of the FERA, 1947, except for certain changes. ( 19 ) UNDER Section 81 (3) of the FERA, 1973, the alleged violation since prior to the coming into effect of the FERA, 1973, the provisions of the old Act, i. e. , the FERA, 1947, could be invoked by virtue of Section 6 of the General Clauses Act. ( 20 ) HENCE, the only issue as already held is interpretation of Section 23 (1) (a) qua Section 10 of the FERA, 1947. Section 23 is the provision for imposition of penalty as well as procedural law to that effect. Under Section 23 (1) (a) of the FERA, 1947, it is clear that for contravention of the provisions of Section 10, two consequences will follow, namely, the penal consequence in the nature of penalty under Section 23 (1) (a) of the said Act and criminal proceeding under Section 23 (1) (b) of the said Act. Hence, in adjudicating the matter, entire Section 10 to be looked into for the purpose whether on the alleged fact as taken in the memorandum impugned in this writ application, there is any violation of Section 10. Section 10 of the FERA, 1947, has two Sub-sections, namely 10 (1) and 10 (2 ). Hence, in adjudicating the matter, entire Section 10 to be looked into for the purpose whether on the alleged fact as taken in the memorandum impugned in this writ application, there is any violation of Section 10. Section 10 of the FERA, 1947, has two Sub-sections, namely 10 (1) and 10 (2 ). There is alleged violation of Section 10 (1) (a) of the said Act, namely, the delay to repatriate the foreign exchange on the factual matrix as narrated. Section 10 (2) of the said Act, which clearly speaks that in the event of failure to comply with the requirement of Sub-section (1) in relation to any foreign exchange, the RBI may issue such direction as would be expedient for the purpose of securing the receipt of foreign exchange or the payment, as the case may be. ( 21 ) HENCE, for non-compliance with Section 10 (1) (a) of the said Act that is for delay in repatriation of the foreign exchange money, there is a provision to deal with the matter under Section 10 (2) of the said Act by the RBI. In the instant case, the RBI has dealt with the matter by its communication dated 28-12-1974, appearing at Annexure G page 79 of the writ application and whereby as per advice, the present writ petitioner repatriated the amount. Hence, the cause of action of such non-repatriation starts from, the date of receipt of such letter as issued by the RBI upon exercise of the power under Section 10 (2) of the said Act. In the event of any violation of the direction of the RBI under Section 10 (2) of the said Act, then only a penal provision under Section 23 of the said Act would be attracted. This point is clear from the interpretation of the statute itself. ( 22 ) IN Section 23 of the said Act, a clear provision has been made that for any violation of the provision made in Section 10 of the Act, the penal consequence will follow. Since Section 10 of the said Act comprising Section 10 (1) as well as Section 10 (2), Section 10 (1) (a) cannot be taken out separately without looking into the provision of Section 10 (2) of the Act itself, as the same would result in two situations and/or contingencies as are contrary to each other. Since Section 10 of the said Act comprising Section 10 (1) as well as Section 10 (2), Section 10 (1) (a) cannot be taken out separately without looking into the provision of Section 10 (2) of the Act itself, as the same would result in two situations and/or contingencies as are contrary to each other. For argument, if it is assumed that Section 10 (1) (a) is independent of Section 10 (2) of the said Act, then for violation of such, that is, delay to repatriate the foreign exchange for any period whatsoever it may be, since, the time for such delay as would attract the provision has not been mentioned, would attract, on the one hand, a penal provision under Section 23 (1) (a) of the said Act, which is to be dealt with by the adjudicating authority under the Act and on the other hand for such violation, the RBI would proceed to deal with the matter under Section 10 (2) of the said Act by passing necessary directions. So, practically for violation of Section 10 (1) (a) of the said Act, it would result in two consequences for one cause of action, which is contrary to the settled legal concept. In other way, another situation would crop up, namely, if Section 10 (1) (a) of the said Act is considered as an independent provision to attract the penal provisions of Section 23 of the said Act, a citizen would face a further penal consequence under the said Section 23 not only for failure to comply with Section 10 (1) (a) of the said Act, but also for violation of Section 10 (2) of the said Act, when such direction as would be passed by the Reserve Bank of India, would be violated. Hence, for one cause of action of delay in terms of Section 10 (1) (a) of the said Act, a citizen would be penalized twice, one for violation of Section 10 (1) (a) of the said Act by an 'adjudicating proceeding' under Section 23 of the said Act and another for non-compliance with the direction for such delay as would be passed under Section 10 (2) of the said Act by the RBI, by another proceeding under Section 23 (1) (a) of the said Act. The same is not permissible, hence, the interpretation would be to avoid such consequences by interpreting that the violation of Section 10 (1) would be completed, when there will be non-compliance with the direction under Section 10 (2) of the said Act. Unless and until, the entire process, namely, decision by the RBI under Section 10 (2) of the said Act is completed, Section 10 (1) (a) independently cannot attract penal consequence under Section 23 (1) (a) of the said Act. It is a settled legal position on interpretation of statutes that a harmonious construction of the statute is to be made. In the instant case, when Section 23 provides for penalty for the violation of Section 10, it means that a cumulative effect of Section 10 (1) (a) and Section 10 (2) of the said Act would lead to penalty procedures under Section 23 of the said Act. In the instant case, whatever the delay caused by the writ petitioners, the same was adjudicated upon and decided by the RBI under Section 10 (2) of the said Act. It is also a statutory provision empowering the RBI to pass necessary direction for securing the receipt of foreign exchange. Hence, the delay of seven years and more as is the only ground in the impugned memorandum upon taking into account the date of the order of reassessment by the income-tax authority in the year 1967, as the date of cause of action, is not at all a relevant factor for initiation of any adjudicating proceeding. Since the delay simpliciter under Section 10 (1) (a) of the said Act cannot attract the penal provisions of Section 23 (1) (a) of the said Act till a decision under Section 10 (2) of the said Act is reached directing to take steps, namely, to repatriate the money or do any other things, the cause of action to attract Section 23 (1) (a) of the Act would be after the direction was passed under Section 10 (2) of the said Act. ( 23 ) FURTHERMORE, the proceeding under the FERA before the adjudicating authority is in the nature of quasi-criminal and the criminal jurisprudence is squarely applicable, hence, a strict interpretation of the sections under the FERA is to be made. ( 23 ) FURTHERMORE, the proceeding under the FERA before the adjudicating authority is in the nature of quasi-criminal and the criminal jurisprudence is squarely applicable, hence, a strict interpretation of the sections under the FERA is to be made. Since the FERA, 1947, and on repeal the subsequent Act FERA, 1973, is a penal statute, it is settled law that interpretation of the provisions of such penal statutes must be made strictly and in the event of two meanings on interpretation of any section, the benefit will go to the accused persons and/or person charged with such violation as the case may be by way of interpretation of the section as favourable to them. Hence, considering the matter in that angle also, the other phase of interpretation, namely, Section 10 (1) (a) of the said Act is dependent upon. Section 10 (2) of the said Act, is to be accepted as it benefits the petitioners. In that view of the matter I am of the view that violation of Section 10 (1) (a) of the Act, that is a delay simpliciter, will not attract any penal consequence until under Section 10 (2), such delay is considered as a delay by the RBI and necessary direction so made to secure foreign exchange by repatriation of the amount is violated. Hence, considering the matter in this angle also, namely, the special norms of interpretation of a penal statute, in the instant case, since, there is a decision under Section 10 (2) by the RBI directing to repatriate the amount irrespective of the delay of seven years as alleged from the date of finality of the reassessment as aforesaid, the time of delay to be construed under Section 10 to attract the provisions of Section 23 of the FERA, 1947, being a time from the date when such communication was received by the writ petitioner-bank from the RBI, which in this case was some time before 3-1-1975, and after 28-12-1974. In that view of the matter, the memorandum impugned in this petition and subsequent notice under rule 3 is not legally tenable. ( 24 ) BESIDES, such, in the instant case, the writ petitioner had no fault in the matter of remittance of the head office expenses in terms of the prevalent policy as accepted by the income-tax authorities as well as the RBI. ( 24 ) BESIDES, such, in the instant case, the writ petitioner had no fault in the matter of remittance of the head office expenses in terms of the prevalent policy as accepted by the income-tax authorities as well as the RBI. The amount was remitted but subsequently when such policy was changed, the repatriation has been completed immediately on direction by the RBI. The very purpose of Section 10 and adjudication for violation of the said provision by imposing penalty under Section 23, a penal consequence is to protect the foreign exchange. Since there is a penal consequence, the law has to be construed strictly applying the test of criminal jurisprudence. It is clear from the phraseology of the statute that for violation of Section 10 on the one hand, penalty can be imposed and, on the other hand, criminal liability can be fixed, hence, the entire statute has to be looked into in that angle. ( 25 ) HENCE, once the RBI has dealt with the matter under Section 10 (2) directing the petitioner to repatriate the money on appreciating the entire issue, namely, that there was no fault on the part of the writ petitioners while remitting the amount to the head office expenses upon permission of the Reserve Bank of India, the cause of action of violation of such directive would arise upon the cumulative effect of both the sections from the date when such letter was received by the writ petitioner-bank. The writ petitioner on receipt of such letter by his communication dated 3-1-1974, appearing at Annexure H of the writ application accordingly took steps. ( 26 ) FURTHERMORE, it is settled under the criminal jurisprudence that when a statute prescribed a penal consequence and when there is a scope of statutory enquiry on subjective satisfaction of the matter in question, mens rea is also a relevant factor to be looked into. From the fact situation of the case, such mens reais absent, which is a condition precedent to fix any citizen under a criminal liability. The fact clearly led to the conclusion that as per the accepted decision for repatriation of foreign exchange money on account of head office expenses of the bank, the same was allowed by the RBI income-tax authorities, etc. The fact clearly led to the conclusion that as per the accepted decision for repatriation of foreign exchange money on account of head office expenses of the bank, the same was allowed by the RBI income-tax authorities, etc. , and when under the changed situation some portion was disallowed on account of head office expenses by the income-tax authorities, a direction of the RBI to that effect was made to repatriate the amount and repatriation has been done immediately. Hence, there is no mens rea to saddle the petitioner-bank and its officers with such penal liability under Section 23 (1) (a) as purportedly intended to by the impugned memorandum of the adjudication proceeding. ( 27 ) THE writ petitioner-bank sought advice to its head office situated at London, and as soon as it got the telex message immediately on 21-1-1975, it repatriated the same by debiting the amounts in the Calcutta Branch under head office expenses. By the impugned memorandum the said fact is not disputed about repatriation. In the impugned memo, delay has been counted from the year 1967 when the assessment by the income-tax authorities under reassessment rule reached its finality after completion of the appeal from the original decision. This is clearly a wrong conception of interpretation of Section 10. In that view of the matter since the cause of action under Section 10 in pursuance of the direction under Section 10 (2) of the RBI started when, direction was issued to repatriate the foreign exchange by the RBI by letter dated 28-12-1974, as received by the bank authorities some time before 3-1-1975, in my view there is no delay to attract the penal consequence under Section 23. In that view of the matter, the show-cause notice in the nature of the memorandum impugned and the initiation of the proceeding on that basis taking into account the delay of seven years or more, is not legally sustainable and, accordingly, the impugned notice in the form of the memorandum dated 11-6-1981, being Annexure A (1) and the impugned order dated 22-6-1984, being Annexure C under rule 3 (1) of the Adjudicating Proceeding and Appeal Rules, 1974, are hereby set aside and quashed. ( 28 ) HENCE, the writ application is allowed.