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Issues:
Violation of Foreign Exchange Regulation Act - Section 5(1) contravention leading to penalty imposition under Section 23(1)(a). Analysis: The petitioner, a partnership firm formed by brothers in 1959, challenged an order from the Director, Enforcement Directorate, imposing a penalty of Rs. 10,000 under the Foreign Exchange Regulation Act for contravention of Section 5(1). The department found contraventions based on incriminating documents seized during a search, linking the petitioner to K. S. Mohamed Ismail. The firm argued that it succeeded a sole proprietorship concern of their father and had no involvement in the alleged contraventions by their father. The court examined the application of vicarious liability in this case, emphasizing personal criminal responsibility and the absence of provisions holding legal representatives liable for the actions of the deceased. The court acknowledged the department's reliance on vicarious liability under Section 23C for contraventions committed by a company, extending to individuals in charge of the company at the time. However, the court noted that the alleged acts occurred in the father's sole proprietorship concern, where the sons had no involvement or responsibility. The court highlighted the absence of statutory provisions imposing liability on legal representatives for contraventions under the Act, distinguishing this case from tax laws where such provisions exist. The court emphasized that the sons, now partners in a distinct business entity, should not be held liable for their father's actions in the sole proprietorship concern. The judgment delved into the doctrine of vicarious liability in criminal law, emphasizing personal culpability and critiquing its application in statutory crimes. The court cited legal principles and precedents to support its conclusion that the sons of the deceased should not be penalized for the alleged contraventions by their father. The court rejected the department's attempt to impose a penalty on the legal representatives of the sole proprietorship concern, emphasizing the sons' lack of involvement and knowledge in the transactions under scrutiny. Ultimately, the court allowed the writ petition, quashing the penalty order without costs.
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