HC absolves ABN Amro of FERA violation charges

The Delhi High Court has absolved ABN Amro Bank from charges of Foreign Exchange Regulation Act (FERA) violations by importing and selling gold to a company in the country.

Justice RC Chopra in his order said the Dutch bank did not breach any provision of the FERA and Foreign Exchange Management Act 1999.

The Bank was selling gold coins to Maple Leaf Trading International (MLTI) established by Cliff Roy and the company was selling them to the public.

There was no violation of Indian laws as the respondents did not transfer any money out of India except a part of salary by Cliff Roy and Paul Singh Claire, who are the Academic Instructor of the company, the 34-page order said.

"Section 76 of FERA clearly shows that the Act aims at bringing foreign exchange into our country to the extent possible. In this case MLTI and other respondents appear to have done nothing to offend the section 76 of FERA as no dividend was declared or remitted to foreign investors," the order said, adding: "The company had never intended to undertake exports from India and was here for the purpose of trading only."

The allegation against the ABN Amro Bank that it violated FERA were also not established for the reason that the bank had imported gold not on behalf of MLTI but in its own right and for itself and had sold them to the company and received payment in Indian currency, the judge said.

The government had alleged that MLTI was established in India without prior RBI permission and was violating FERA. The respondents had adopted the automatic approval route and established the company by filing Form Foreign Currency (FC) of the RBI, argued MLTI and Cliff Roy counsel Amit Sibal.

Additional Solicitor General PP Malhotra said the Form FC (RBI) submitted by MLTI on May 21, 1998, did not mention that the newly-incorporated company was a trading company and would mainly make exports.