9911796707
TMI Blog2016 (7) TMI 1701X X X X Extracts X X X X X X X X Extracts X X X X ..... 91,685.68 (approx. Rs. 20,21,25,870) within the stipulated period in contravention of the provisions of Section 8 of Foreign Exchange Management Act, 1999 read with Regulation 9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulation, 2000. It is alleged that the Appellant was a Director of the company along with other directors Rajat Gupta, Executive Director, R.K.T. Dass, Executive Director, Sanjay Gupta, Director, V. K. Rathee, Director and R.K. Pramanik, Director. All the directors were charged for said contraventions in terms of Section 42 of the FEMA, 1999. 3. Investigation was initiated on the basis of information received from RBI regarding non-realization of export bills of M/s. Aviquipo of India Ltd. and its sister companies, which were negotiated through different banks. It is said that since the Managing Director of the company failed to respond to various summons, the details of outstanding export bills were demanded from the authorized dealer, Oriental Bank of Commerce on behalf of erstwhile Global Trust Bank Ltd. The authorized dealer submitted 10 copies of pending GRs in respect of M/s. Aviquipo of India Ltd. vide their letter dated 24.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCN in which he has stated that he was only Non-Executive Director and was not involved in the day today working of the company and had also not attended any board meeting of the company. In view of the above the Adjudicating Authority dropped the proceedings against R.K.T. Das and further held that rest of the Directors cannot escape their responsibilities, therefore he held them guilty for contravention of Section 8 of FEMA read with regulation 9 and 13 of Foreign Exchange Management (Export of Goods and Services) Regulation, 2000 also read with section 42(1) and (2) of FEMA, 1999 and imposed a penalty or Rs. 2 crores against the company and a penalty of Rs. 20 lakhs against the five directors including the Appellant. 5. In Appeal NO. 21/2011 it is alleged that M/s. Tirumala Impex Pvt. Ltd. had exported goods abroad but had failed to take necessary steps to realize the export proceeds within the stipulated period in contravention of the provisions of Section 8 of FEMA, 1999 read with regulation No. 9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulation, 2000. Apart from the company, nine directors of the company including the Appellant were charged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty of Rs. 70 lakhs each against remaining directors including the Appellant individually. 7. Aggrieved from the two Adjudication Orders, impugned herein separate appeals have been filed by the Appellant challenging both the Adjudication Orders. It has been informed that against the orders on the applications for stay and waiver from pre-deposit of penalties of this Tribunal in both the appeals, the other co-noticees have approached different High Courts and their appeals are stated to be pending, while in the case of the Appellant, he has complied the interim order, therefore, the instant appeals have been separated and are being disposed of finally on merits. 8. Ld. Counsel for the Appellant has contended that the Appellant after completing engineering degree in Mechanical Engineering in 1994 joined M/s. Aviquipo of India Limited as an employee on the post of Manger (Technical Services) for looking after the production of plastic injection factory of M/s. Aviquipo of India Limited situated in Kolkata. It has also been submitted that M/s. Aviquipo of India Limited was a research, design and standard organization - approved company (approved vendor for Indian Railways for supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad never remained in-charge or responsible to the company for the conduct of the business. He also had no knowledge of any of the transactions of the company in question. He was neither a shareholder of the company nor a shareholder of the group of companies and had also not attended any Board Meetings. The Appellant had been residing in Kolkata and was never posted in Mumbai. Submission is that on 10th October, 2005 a show-cause notice is alleged to have been issued to the company and its directors for alleged contraventions under Section 8 of FEMA read with regulations 9 and 13 of the Foreign Exchange Management (Export of Goods and Services) Regulation, 2000 read with Section 42(1) and (2) of FEMA, 1999, based on a complaint, however no show-cause notice or call notice was served upon the Appellant and he had no knowledge about the proceedings. It was only when he visited the Office of Enforcement Directorate in connection with another show-cause notice relating to M/s. Geekay Exim matter, which was also on the similar lines as the instant matter for filing the reply, he learnt about the proceedings of this matter. The Appellant has been exonerated and proceedings have been drop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 62. 12. Ms. Natasha Sarkar, Ld. Legal Consultant for Respondents has defended the impugned orders and has submitted that the proceedings in both the appeals were held exparte, because despite knowledge of the Adjudication proceedings and issuance of show-cause notices and notices for personal hearing, the Appellant did not turn up in Appeal NO. 20/2011. Noticee Rais Ahmed who was the authorized representative of M/s. Aviquipo of India Ltd, was the Managing Director of the Company and was examined by the Enforcement Authorities. His statements were recorded on 15.04.2004 and 03.08.2005 wherein he confirmed that a total amount of US $4491685.68 was outstanding for realization in respect of the company. This fact was also confirmed by the company vide its letter dated 21.04.2004. No efforts by the company or its Managing Director and other Directors including the Appellant who was also a director and was thus associated with the management of the company and had knowledge of the exports were made for non-realisation of the amount of sale proceeds. The Appellant failed to make any efforts for realization and repatriation of the amount of sale proceeds. The impugned order is a reasoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbhai Hansarajbhai Patel v. Asstt. CIT [2013] 353 ITR 567/[2012] 211 Taxman 386/26 taxmann.com 226 (Guj.) Hon'ble Gujarat High Court in paragraph 20 of judgment has observed that it is of course true that the responsibility of establishing such facts is cast upon the directors. Therefore, once it is shown that there is a private company whose tax dues have remained outstanding and same cannot be recovered, any person who was a director of such a company at the relevant time would be liable to pay such dues. Further submission is that in the matter of Briji Gopala Dada (supra), the Hon'ble Kerala High Court in paragraph 16 of the judgment has held that merely because the Appellants were non-executive directors or independent directors, is not a ground to come to a conclusion that they have no role in the day to day administration of the company. Though there is a Managing Director, who is normally responsible for the conduct of the company, the company may also include other directors who in the day to day administration of the company may be associated along with the managing director and this fact be known only to the directors and need not be known to others, therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not been stated to be a partner of the firm/company and there is no evidence on record to prove that he was in-charge of the business, therefore, the case laws relied upon by Ld. Legal Consultant are not applicable. 17. In Puja Ravinder Devidasani (supra), the Hon'ble Supreme Court in para-17 of the judgment has held that non-executive director is no doubt a custodian of the governance of the company, but is not involved in day to day affairs of the running of its business and only monitors the executive activity. It has been further held that to fasten vicarious liability under Section 141 of the Act (Negotiable Instruments Act) on a person at the material time that person shall have been at the helm of the affairs of the company, one who actively looks after the day to day activities of the company and is particularly responsible for the conduct of its business. In Bhupendra V. Shah (supra) relied upon by Ld. Counsel for the Appellant in para-22 of the judgment, the Hon'ble Delhi High Court has held that Section 42(1) of FEMA extends the liability by a deeming fiction only to such directors who were at the relevant point in time in-charge, were responsible to the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
