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TMI Blog2019 (9) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... t the allegations in this regard are of a broad general nature without specifically indicating whether in fact the person was in-charge of and responsible to the company for the conduct of its business at the relevant time and was, therefore, liable for such contravention. Both the Opportunity Notice as well as the SCN are identical in this respect. While ED decided not to proceed against these Appellants on criminal side, pursuant to the Opportunity Notice issued to them, thereby implicitly accepting their explanation that they fell outside the scope of Section 68 (1) of the FERA, it seemingly adopted a different standard as far as the adjudication proceedings are concerned. The Court sees no justification for applying a different standard for fastening liability on the Appellants whether the criminal liability consequent upon the Opportunity Notice or civil liability following the SCN. There appears to be no scope for adopting a different yardstick in this regard. Judgments of the learned Single Judge are unsustainable in law. - LPA 339/2009 and LPA 474/2014 - - - Dated:- 28-8-2019 - S. MURALIDHAR AND TALWANT SINGH JJ. Appellants Through: Mr. Sudhir Nandarajo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aneously, a criminal complaint under Section 56 FERA was filed against NIL and some of the co-noticees in the Court of the Additional Chief Metropolitan Magistrate ( ACMM ), New Delhi on 31st May, 2002. 6. The allegations in the Opportunity Notice were that the documents seized from NIL during the search revealed that while NIL had ostensibly concluded contracts with several Russian companies for sale of coffee in Indian rupees, the entire operation was actually controlled by NWTC in Switzerland and goods were actually exported to NWTC in Helsinki in Finland. Specific to the present Appellants, it was stated in paragraph 16 of the Opportunity Notice as under: 16. And whereas it appears that S/Shri Narender Singh, D.E, Ardeshir Lim Khing Fong, M.W.Q. Garrett. Brij Mohan Khaitan, Jean Daniel Luethi, Stephan Issesmann, Ranjit Raj and R.K. Sharma were directors/ in-charge of M/s Nestle India Ltd. during the relevant period and were responsible for the conduct of the said Company, It is, therefore, appears that they have also rendered themselves liable to be proceeded against and punished accordingly along with the Company for the contravention committed by the Compa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice dated 2nd September, 2003 was concerned, an application was filed in the present LPA No.339/2009 being CM No.17820/2009 seeking leave to amend W.P.(C) No.6198/2003 to challenge the said notice. This application was dismissed by this Court on 18th January, 2010 by observing that the Appellants were seeking to introduce a new cause of action, which is not permissible. This led the Appellants to file W.P. (C) No.2724/2014 seeking quashing of the said notice dated 2nd September, 2003. 13. As far as W.P.(C) No.6198/2003 is concerned, it was dismissed by the first impugned order dated 27th April, 2009 of the learned Single Judge, inter alia, holding as under: 21. The relevant paragraphs of the impugned show-cause notice, merely go on to say that as the petitioners herein are directors/in-charge of NIL, therefore they were liable for the contravention of law by NIL in the export of coffee to Russia. There undoubtedly are no specific allegation against them, which pinpoints their role in the alleged offence. A show-cause notice is not a mere empty formality, but a necessity, so that the person is informed of allegations against him to provide a proper, timely and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and that too of the year 2003, the ends of justice would be met if the petitioners are given liberty to raise the issue of jurisdiction at the preliminary stage before the adjudicating authority itself The adjudicating authority is directed to decide the aforesaid preliminary issue. All rights and contentions of both the parties including the issue of delay and laches are left open. With the aforesaid observations, present petition and application stand disposed of. 17. Aggrieved by the said order, LPA 474/2014 was filed which was directed to be heard along with LPA No.339/2009. 18. This Court has heard the submissions of Mr. Dayan Krishnan and Mr. Sudhir Nandarajog, learned senior counsel for the Appellants and Mr. Jasmeet Singh, learned CGSC for the Respondents. 19. The very basis for the ED to proceed against the present Appellants is Section 68 (1) of FERA which reads as under: 68. Offences by companies. (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of the contravention was committed, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regard are of a broad general nature without specifically indicating whether in fact the person was in-charge of and responsible to the company for the conduct of its business at the relevant time and was, therefore, liable for such contravention. Interestingly, both the Opportunity Notice as well as the SCN are identical in this respect. While ED decided not to proceed against these Appellants on criminal side, pursuant to the Opportunity Notice issued to them, thereby implicitly accepting their explanation that they fell outside the scope of Section 68 (1) of the FERA, it seemingly adopted a different standard as far as the adjudication proceedings are concerned. The Court sees no justification for applying a different standard for fastening liability on the Appellants whether the criminal liability consequent upon the Opportunity Notice or civil liability following the SCN. There appears to be no scope for adopting a different yardstick in this regard. 22. The language of Section 68 (1) in this regard is no different from the language of Section 141 of the Negotiable Instrument Act, 1888 ( NI Act ), and in context of which, the legal position has been explained by the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Courts exercising jurisdiction under Article 226 of the Constitution, would not readily interfere with an SCN at the stage of adjudication, this is not an inflexible rule, particularly in a case where the foundational facts necessary for proceeding with such adjudication is shown not to exist. In the case of each of the present Appellants, it has not been disputed that each of them, at the relevant time, was a Non-Executive Director of NIL and, therefore, not a person in-charge of and responsible to the NIL for the conduct of its business . With that position having not been questioned in the context of the criminal proceedings, requiring the Appellants to face the adjudication proceedings would be a futile exercise. 25. It may be added that the second impugned notice dated 2nd September, 2003 issued to these Appellants is in fact a cyclostyled notice containing identical paragraphs where it is mechanically stated that each of them have failed to reply to the SCN/MFA, when in fact, as already noticed hereinbefore, each of them had in fact filed such a reply. This additionally points to non-application of mind by the Adjudicating Authority while issuing the above not ..... X X X X Extracts X X X X X X X X Extracts X X X X
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