9911796707
TMI Blog2006 (12) TMI 231X X X X Extracts X X X X X X X X Extracts X X X X ..... er No. 3, Mr. S.M. Datta and petitioner No. 4, Mr. D.M. Buckle were directed to deposit the penalty imposed upon them by the respondent No.1 Special Director, Enforcement Directorate by his order dated 17-7-2000 to the extent stated in the order dated 22-9-2006. 2. The brief facts of the case as per the case set up by the petitioner are as under : ( a )On 25-11-1993, a show-cause notice was issued to the petitioner No.1 requiring it to show why an action under section 18(2) read with section 18(3) of the Foreign Exchange Regulation Act, 1973 ( the FERA ) should not be initiated against it as well as petitioner Nos. 2, 3 and 4 for non-recovery of export proceeds of about Rs. 2.95 crores within the stipulated time, against exports made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the show-cause notice dated 25-11-1993 issued by the respondent No. 1 in respect of exports made by the petitioner No. 1 to Iraq, USA, Canada and Italy during the period 1982 1991 for which payments could not be recovered. ( e )On 10-11-1994, the petitioner No. 1 made a representation to the respondent No. 1 wherein it was stated that the petitioner Nos. 2, 3 and 4 sought to be prosecuted were neither responsible nor were involved in any manner with the export business of the company and therefore, cannot be held liable for the alleged contravention of section 18(2) of the FERA. ( f )On 17-7-2000, the Respondent No. 1 held that the petitioner No. 1 as well as the petitioner Nos. 2, 3 and 4 guilty of contravention under section 18(2) rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned counsel for the petitioner Mr. Ravinder Narain, is based on the judgment of the Hon ble Supreme Court in Mehsana Distt. Co-op. Milk P.U. Ltd. v. Union of India 2003 (154) ELT 347. The learned counsel for the petitioner has submitted that the impugned order dated 22-9-2006 is merely based on prima facie balance of convenience without addressing the merits of the case at all. In the process of doing so, only financial hardship has been taken into account. The Hon ble Supreme Court has laid down the following position of law in the case of Mehsana Distt. Co.-op. Milk P.U. Ltd. s case ( supra ) : "2. The issue here relates to the order passed by the Commissioner (Appeals), Central Excise and Customs, under section 35F of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the judgment of the Tribunal in Taj Traders Transport Co. Ltd. v. Director of Enforcement 1995 Case Law/FER/AB 109 where the following position of law was laid down : "It would, therefore, follow that if an application seeking extension of time or for permission for writing off the outstanding export proceeds is pending consideration of the Reserve Bank, the question whether there has been a contravention of the provisions of section 18(2) cannot be determined unless and until the Reserve Bank has refused extension of time or the permission for writing off, as the case may be. If any adjudication proceedings are initiated during the pendency of such applications before the RBI, such proceedings would be pre-mature and withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng application for dispensation of pre-deposit of the penalty. These lengthy arguments will be appreciated at the time of hearing on merits. On the other hand, the appellants have a case to answer and adjudication order is not bad ex facie . The question of displacement of adverse legal presumption under section 18(3) will need proper appreciated of all facts whether they constitute a reasonable step for repatriation of export proceeds. The Directors holding such position are commonly entitled to manage the affairs of the company and article 149 of the Article of Association. It is well-settled that company s action and mind is controlled by Board of Directors. The question here is of negligent behaviour of the company in not taking reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cent of the penalty of Rs. 2 crores was required to be deposited and after taking into account the financial health of the company, there was no financial hardship warranting interference with the pre-deposit of 15 per cent of the penalty. 9. Mr. Narain has argued that the directors of the company cannot be held responsible. It is submitted that they were at the relevant time, not the Directors of the company looking after that aspect of the business of the company in respect of which the penalty was imposed for the alleged infraction at the relevant time, i.e., years 1982 91. The petitioner No. 4 Shri D.M. Buckle was not even the Director of the company at the relevant time. 10. Insofar the case of the petitioner No. 4 Shri D.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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