2023 (3) TMI 335 - HC - FEMA

Penalty u/s FERA Act - Demand fastened upon the petitioner in terms of Sections 70(1)(i) 70(1)(ii) of the Foreign Exchange and Regulation Act, 1973 - HELD THAT - A compilation has been filed by R1 R2 containing four documents. That apart, the complaint copy itself refers to order of adjudication having been passed, though perhaps not served. Thereafter, an opportunity notice has been issued which has been duly served upon the petitioner. The diary of proceedings before the Criminal Court have also been produced to show that the petitioner has been present from 10.06.2008 onwards, on various dates till 29.01.2018. In the meantime, steps were initiated by the respondent for splitting of the complaint qua the company and the Directors. As a result was continued in the name of the company and one Director and as against the petitioner and another Director. Thus, through all this, the petitioner has certainly been aware of the factum of order having been passed and this is the question that this Court has to contend with, as to whether such prolonged inaction on the part of the petitioner to even seek a copy of the order and then initiate appropriate steps, may be condoned. The response, in my considered view, must be in the negative, for the reason that there is no justification whatsoever, let alone justifiable explanation, that has been set out to consider condonation of such intervening inaction. In fact, and as been noted in the preceding paragraphs, the case of the petitioner has bordered on stating that he was not even aware of the order which position is clearly contrary to the facts.

Summary

Issues:
Challenge to notice issued by Special Director of Enforcement regarding adjudication order under FERA Act, non-service of order on petitioner, petitioner's belief of proceedings being dropped, petitioner's awareness of order through criminal court proceedings, condonation of petitioner's inaction.

Analysis:
The petitioner challenged a notice issued by the Special Director of Enforcement regarding an adjudication order under the Foreign Exchange Regulation Act, 1973 (FERA Act). The notice requested the penalty imposed under the adjudication order to be realized as arrears of land revenue. The petitioner claimed that the adjudication order dated 31.12.2001 was never served upon them. The writ petition was filed in 2016, raising questions about the delay in challenging the order after fifteen years. The affidavit filed by the petitioner stated that they were unaware of any orders being passed and believed that the proceedings under FERA had been dropped.

The petitioner produced a copy of a criminal court case initiated based on the adjudication order, indicating their awareness of the order. The respondents were directed to produce records to establish whether the order was served or not. Documents filed by the respondents and the complaint copy confirmed the existence of the adjudication order, although it may not have been served. The petitioner was also served with an opportunity notice related to the order. The diary of proceedings before the criminal court showed the petitioner's presence in the case from 2008 to 2018.

The court noted that the petitioner had been aware of the adjudication order through various legal proceedings and questioned the prolonged inaction in seeking a copy of the order and taking appropriate steps. The court found no justifiable explanation for the petitioner's lack of action and dismissed the writ petition. The petitioner's request for a copy of the order for academic purposes was acknowledged, and the respondents were directed to provide the same. The court concluded that there was no merit in the petition and confirmed the impugned order, dismissing the petition without costs.