Suborno Bose vs Enforcement Directorate And Anr on 5 March, 2020


Supreme Court of India

Suborno Bose vs Enforcement Directorate And Anr on 5 March, 2020

Author: A.M. Khanwilkar

Bench: A.M. Khanwilkar, Dinesh Maheshwari

                                                 1

                                                                     REPORTABLE


                                IN THE SUPREME COURT OF INDIA


                                 CIVIL APPELLATE JURISDICTION


                                 CIVIL APPEAL NO. 6267 OF 2020

  Suborno Bose                                                     … Appellant(s)

                                              Versus

  Enforcement Directorate & Anr.                                    …Respondent(s)



                                          JUDGMENT

A. M. KHANWILKAR, J.

1. This appeal emanates from the complaint proceedings initiated

by the adjudicating authority being Deputy Director, Enforcement

Directorate Foreign Exchange Management Act, under Section 16(3)

of the Foreign Exchange Management Act, 1999 (for short, “the FEMA

Act”).

2. A show­cause notice dated 19.5.2004 was issued to the

appellant, stating that the adjudicating authority was satisfied that
Signature Not Verified

Digitally signed by
DEEPAK SINGH

there was a prima facie contravention of Section 10(6) of the FEMA
Date: 2020.03.05
16:56:50 IST
Reason:

Act read with Sections 46 and 47 of the said Act and paragraphs A­10
2

and A­11 (Current Account Transaction) of the Foreign Exchange

Manual 2003­04 in the complaint filed against the company named

M/s. Zoom Enterprises Limited (for short, “the Company”) of which,

the appellant was the Managing Director. The appellant filed his

reply to the said show­cause notice on 10.6.2004, inter alia,

contending that the Company had purchased 2 Nos. of Water Cooled

Screw Chiller Unit Model and other accessories for a cost of 374000

FRF from Carrier S.A. of France and Air Handling and Fan Coil Unit

for US$ 35766 from Carrier Corporation, Syracuse, New York. The

import was done under Export Promotion Capital Goods (EPCG)

Licence under Open General Licence (OGL). The goods were

imported, but kept in warehouse, as the Company, which at the

relevant time was under Mr. Aniruddha Roy Chowdhury and others,

failed to take steps to get the goods released. The appellant took over

the project only in July, 2002 and afterwards, he spent nearly 5

crores of rupees for the project work. Due to financial constraints, in

February, 2003, a request was made to Tourism Finance Corporation

of India Limited (TFCI) for sanction of a bank guarantee of

Rs.40,00,000/­ (Rupees forty lakhs only) to get the shipment in

question cleared from the Customs Department, but for the reasons

beyond the control of the Company and the appellant in particular,
3

the shipment could not be cleared. A request was made to the

Customs authority to help the Company to get the goods cleared, in

case the clearing agent is unable to take necessary steps on their

behalf. In the end, a request was made in the reply to grant more

time to get the goods cleared and to submit the Bill of Entry

(Exchange Control Copy) with the authorised dealer.

3. The reply to the show­cause notice filed on behalf of the

Company including for the appellant and the submissions made

before the adjudicating authority were duly considered by the

adjudicating authority in its Order (Original) dated 30.12.2004. The

adjudicating authority concluded that the noticee Company and the

appellant had violated the provisions of Section 10(6) of the FEMA Act

read with Sections 46 and 47 of the said Act read with paragraphs A­

10 and A­11 (Current Account Transaction) of the Foreign Exchange

Manual 2003­04 having found that the goods had arrived in India,

but the Company failed to submit Bill of Entry and did not take

delivery of the goods. The import formalities would have had

completed only after submission of Bill of Entry. Thus, though the

goods for which foreign exchange was remitted had reached the

destination of the users, but the same were not released and as such

kept in bonded warehouse. That resulted in contravention
4

warranting issuance of show­cause notice to the Company and the

appellant. Resultantly, the adjudicating authority passed the

following order: ­

“ORDER
In view of my above findings, I hold M/s Zoom enterprises
Ltd., and their Managing Director Sri Suborno Bose guilty of
the charge. In exercise of powers conferred on me under
section 13(I) of the Foreign Exchange Management Act, 1999. I
impose on them the following amount of penalty.

       1)    M/s Zoom Enterprise Ltd.       Rs.10,00,000/­ Rupees
                                            Ten Lakhs
       2)    Sri Suborno Bose               Rs.10,00,000/­(Rupees
                                            Ten Lakhs)

The penalty amount so imposed in terms of the provisions
of section 13(I) of the said Act shall be deposited in the office
of the Deputy Director, Directorate of Enforcement, Calcutta
by cheques/demand draft issued in favour of the Chief
Enforcement Officer (Admn.), 3rd M.S.O. Building, 6th floor,
C&D Wing, Salt Take, Calcutta 700064 within 45 days from
the date of receipt of this order.”

4. The Company, as well as, the appellant carried the matter in

appeal before the Special Director (Appeals), FEMA & Commissioner

of Income­Tax, Delhi being Appeal Nos. SD(A)/Kol/04/05/112 and

SD(A)/Kol/04/05/113. The appellate authority vide order dated

13.6.2005 dismissed both the appeals and was pleased to uphold the

decision of the adjudicating authority. After adverting to the admitted

facts, the appellate authority proceeded to consider the requirements

of the relevant provisions necessitating submission of Bill of Entry to

effectuate the remittance and complete the import of the goods for
5

which the remittance was made. The appellate authority observed as

follows: ­

“7. As per the provisions of Section 10(6) of FEMA, the
foreign exchange acquired from an authorized dealer has to be
utilized for the purpose it was released or otherwise it should
have been surrendered to the authorized dealer. The
Regulation 6(1) in the FEMA (Realisation, Repatriation &
Surrender of Foreign Exchange) Regulation 2000 issued by
RBI on 3.5.2000, prescribe that the transaction should be
completed within a period of sixty days from the date of
acquisition or purchase of foreign exchange. The RBI has
issued a master circular No.7/2004­05 dated 1.7.2004 but the
Circular No.9 A.P. (DIR Series) (2000­01) issued on 24.8.2000
by the RBI, prescribing guidelines for the import of
goods/currency, is applicable at the relevant time when the
appellant company imported the goods. Certain obligations
and requirements have been prescribed for the purchaser of
the foreign exchange in Para A.3 and A.17. As per para A.17

(ii), it is obligatory on the purchaser of foreign exchange for all
imports with value exceeding US$5000, to submit exchange
control copy of the bill of entry for home consumption, to the
authorized dealer. If such original bill of entry is not
submitted within six months from the date of remittance the
authorized dealer has to report the same to the RBI.

8. In the present case the foreign exchange was remitted
on 18/4/2000 and 19/6/2000 for import of refrigerating
machinery, but instead of taking the delivery of the
imported goods, these were warehoused. The management
of the company as argued by the Ld. Counsel, changed
hands in October, 2001. As per the requirements of
section 10(6) of FEMA RBI regulation dt. 3.5.2000 and
circular dt. 24.8.2000, supra the formalities for import
have to be completed within six months of remittance of
foreign exchange. If the appellant is unable to comply
with these requirements under FEMA and the RBI,
necessary approval of the authorized dealer and the RBI is
necessary. Though the imports were made in 2000 but no
steps have been taken till 2005 either to take delivery of
the goods so imported and warehoused or for taking
necessary extension/approval from RBI/authorized dealer.
As far as the change in management of the company is
concerned, the change took place in late 2001 but even
after the change in management, the then Chairman, Sh.
Anirudh Rai Choudhary, remained Director of the new
6

company up to 2004, as is mentioned in the annual report
for the year 2003­04, a copy enclosed with the appeal
petition. The Managing Director of the changed company
was well aware of the goods so imported and warehoused
as a reply were submitted to the Enforcement Authorities
as early as in July, 2002.

9. As far as financial constraints are concerned it is seen
from the MOU dt. 22.10.2001 that the appellant company
was transferred from the old management to the new
management after the shares were transferred for about
six crores of rupees. From the annual report for the year
2003­04, it is seen that loans of Rs.7.33 crores were taken
and invested a capital work­in­progress shown at Rs.13.07
crores. The company also advanced Rs.1.20 crores
Substantial investment was made in the capital work
including air conditioners, furniture and electrical
installation, etc, etc. In spite of availability of sufficient
funds during this period the appellant company did not
take any step to take delivery of the imported goods
which are lying in the warehouse since 2000. Note was
given in Schedule 11 to the annual accounts that the
liability against bank guarantee and customs duty in
respect of import of air conditioning plant was not
provided in the accounts. The sequence of such events
clearly show that the appellant company and its Managing
Director responsible for running the company did not take
reasonable steps of delivery of the imported goods so
warehoused and thereafter to submit bill of entry to the
authorized dealer.

10. It is therefore evident that the appellants did not comply
with the requirements of section 10(6) of FEMA, RBI
regulation dt. 3.5.2000 and circular dt. 24.8.2000, supra.
Even when the show cause notice was issued by the AA steps
were not taken to take delivery of the goods from the
warehouse and to submit the bill of entry to the authorized
dealer. It is therefore held that the appellant company is guilty
of contravening these provisions of FEMA and guidelines
issued by the RBI supra. The AA is justified in imposing the
penalty at Rs.10 lakhs on the appellant company which is
confirmed. The appeal filed by the appellant company is
accordingly dismissed.

11. As far as the other appellant is concerned Sh. Suborno
Bose was the Managing Director and responsible for the
conduct of business of the company. He is so guilty of
contravention of provisions of FEMA and guidelines of RBI
7

thereof, supra. It is therefore held that AA is justified in
imposing the penalty of Rs.10 lakhs on the appellant
Managing Director which is confirmed. The appeal filed by
the Managing Director is accordingly dismissed.

12. The Ld. Counsel has referred to certain decisions under
Excise and Custom Act. These cases have not been discussed
as the violation under FEMA and RBI guidelines depends on
the facts of each individual case. The appeal being decided on
the merits of the case under consideration.

13. It is necessary to mention here that the foreign exchange
was remitted in 2000, the goods were imported in 2000 and
were warehoused in 2000 when Sh. Anirudh Rai Choudhary,
was the then Chairman of the company. He remained
Chairman till October, 2001 when the management changed
as per MOU. Sh. Anirudh Rai Choudhary remained Director of
the new company till 2004 as in evident from the annual
report for the year 2003­04. As he was in­charge and was
responsible for the conduct of business of the company at the
time foreign exchange was remitted and goods were imported,
he also seems to be responsible for the violation of provisions
of FEMA and RBI guidelines supra. The AA may consider
initiation of adjudication proceedings against Sh. Anirudh Rai
Choudhary.

14. Since the relevant appeals have been decided their
applications for stay have become infructuous. The AA is
directed to give effect to this order.”
(emphasis supplied)

5. Being aggrieved, the Company, as well as the appellant carried

the matter before the High Court at Calcutta (for short, “the High

Court”) by way of FEA Nos. 17/2007 and 18/2007. Both appeals

were dismissed by the High Court vide judgment and order dated

17.9.2008. It noted the rival submissions and observed thus: ­

“After hearing the learned Counsel for the parties and after
going through the materials on record placed before us, we are
of the opinion that the violation which has been done by the
appellant/petitioner, cannot be stated to be a technical
violation and it is well­settled law that contravention of the
said Act or Foreign Exchange Regulation Act, 1973 has
created a strict liability. The violation of these two Acts would
8

come within the meaning of economic offence and cannot be
treated as technical offence.

Hence, in our considered opinion, after initial committal
and/or contravention of Section 10(6) of the said Act, the
violation continues till the time, compliance is made.
Therefore, we hold that taking over the charge of the appellate
company in the year 2002, cannot absolve the appellant from
the liability and, in our considered opinion, the appellant
company correctly held as guilty on the face of the
continuance of the offence.

Hence, we are of the considered opinion that the Learned
Tribunal correctly came to the conclusion and we do not find
that there is any reason whatsoever to interfere with the order
so passed by the Learned Tribunal. Accordingly, both the
appeals are dismissed.

For the reasons stated hereinabove, both the appeals are
disposed of.”

Against the decision of the High Court, the Company, as well as the

appellant preferred separate special leave petitions before this Court.

The special leave petition filed by the Company, being SLP(C) No.

6897/2009 came to be dismissed on 30.3.2009. By the same order,

the Court issued notice on the special leave petition being SLP(C) No.

6551/2009 filed by the appellant, from which the present appeal has

arisen. The order reads thus: ­

“Special Leave Petition (C) No.6897 of 2009 is dismissed.
Keeping in view the contentions raised before us while
dismissing S.L.P. (C) No.6897 of 2009, issue notice in S.L.P.
(C) No.6551 of 2009.”

Resultantly, what remains to be decided in the appeal preferred by

the appellant is limited to his argument that the appellant herein

could not be made liable for the contravention committed by the

erstwhile management of the Company.

9

6. We have heard learned counsel for the parties.

7. Be it noted that the contravention relates to the period of the

year 2000, whereas, the appellant took over the management of the

Company in terms of the Memorandum of Understanding dated

22.10.2001 entered into in that behalf. The appellant wanted to

argue that in the facts of the present case, there was no contravention

of Section 10(5) of the FEMA Act or any other provision necessitating

action under Section 10(6) of the said Act muchless initiating

complaint procedure. Ordinarily, the appellant could have been

allowed to pursue such argument, but for the dismissal of the special

leave petition filed by the Company. In that, consequent to the

dismissal of the petition filed by the Company, the finding and

conclusion recorded by the adjudicating authority as upheld by the

first appellate authority, and of the High Court recording

contravention committed by the Company and for which complaint

action was just and proper including the imposition of penalty as

awarded against the Company and the appellant has attained finality.

That cannot be reopened muchless at the instance of the present

appellant. This is reinforced by the order issuing notice on the

special leave petition filed by the present appellant, dated 30.3.2009.
10

It is indicative of the fact that the contentions specific to absolve the

appellant from the complaint action could be examined.

8. In other words, the core issue that needs to be considered in the

present appeal is limited to the defence of the appellant that he could

not be made responsible for the stated contravention. For, he became

the Managing Director of the Company much later i.e. on 22.10.2001.

For examining that argument, we may have to advert to Sections

10(5) and 10(6) of the FEMA Act. The same read thus: ­

“10. Authorised person.­

xxx xxx xxx

(5) An authorised person shall, before undertaking any
transaction in foreign exchange on behalf of any person,
require that person to make such declaration and to give such
information as will reasonably satisfy him that the transaction
will not involve, and is not designed for the purpose of any
contravention or evasion of the provisions of this Act or of any
rule, regulation, notification, direction or order made
thereunder, and where the said person refuses to comply with
any such requirement or makes only unsatisfactory
compliance therewith, the authorised person shall refuse in
writing to undertake the transaction and shall, if he has
reason to believe that any such contravention or evasion as
aforesaid is contemplated by the person, report the matter to
the Reserve Bank.”
(6) Any person, other than an authorised person, who has
acquired or purchased foreign exchange for any purpose
mentioned in the declaration made by him to authorised
person under sub­section (5) does not use it for such purpose
or does not surrender it to authorised person within the
specified period or uses the foreign exchange so acquired or
purchased for any other purpose for which purchase or
acquisition of foreign exchange is not permissible under the
provisions of the Act or the rules or regulations or direction or
order made thereunder shall be deemed to have committed
contravention of the provisions of the Act for the purpose of
this section.”
11

Additionally, it will be useful to advert to Section 42 of the FEMA Act,

which reads thus: ­

“42. Contravention 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 the contravention was
committed, was in charge of, and was responsible to, the
company for the conduct of the business of the company as
well as the company, shall be deemed to be guilty of the
contravention and shall be liable to be proceeded against and
punished accordingly:

Provided that nothing contained in this sub­section shall
render any such person liable to punishment if he proves that
the contravention took place without his knowledge or that he
exercised all due diligence to prevent such contravention.
(2) Notwithstanding anything contained in sub­section (1),
where a contravention of any of the provisions of this Act or of
any rule, direction or order made thereunder has been
committed by a company and it is proved that the
contravention has taken place with the consent or connivance
of, or is attributable to any neglect on the part of, any director,
manager, secretary or other officer of the company, such
director, manager, secretary or other officer shall also be
deemed to be guilty of the contravention and shall be liable to
be proceeded against and punished accordingly.
Explanation.—For the purposes of this section—

(i) “company” means any body corporate and includes a firm
or other association of individuals; and

(ii) “director”, in relation to a firm, means a partner in the
firm.”

A fair reading of Section 10(5) envisages that the authorised person

before undertaking any transaction in foreign exchange on behalf of

any person, must require that person to make a declaration and to

give such information as will reasonably satisfy the authorised person

that the transaction will not involve, and is not designated for the

purpose of any contravention or evasion of the provisions of the FEMA
12

Act or of any rule, regulation, notification, direction or order made

thereunder. If such satisfaction is not reached, the authorised person

need not proceed with the proposed transaction and must report

about the same to the Reserve Bank.

9. The real provision which needs to be reckoned for answering the

controversy brought before this Court is Section 10(6) of the FEMA

Act. This provision is a deeming provision pointing towards the

specified circumstances, which would result in having committed

contravention of the provisions of the FEMA Act or for the purpose of

the stated Section. The specified circumstances are (i) when a person

acquires or purchases foreign exchange for any purpose mentioned in

the declaration made by him to authorised person does not use it for

such purpose; (ii) that person does not surrender the acquired or

purchased foreign exchange to authorised person within the specified

period, and (iii) the person uses the acquired or purchased foreign

exchange for any other purpose for which purchase or acquisition of

foreign exchange is not permissible under the provisions of the FEMA

Act or the rules or regulations or direction or order made thereunder.

Each of these are standalone circumstances.

10. In the present case, the finding of fact is that the import of goods

for which the foreign exchange was procured and remitted was not
13

completed as the Bill of Entry remained to be submitted and the

goods were kept in the bonded warehouse and the Company took no

steps to clear the same. As a result, Section 10(6) of the FEMA Act is

clearly attracted being a case of not using the procured foreign

exchange for completing the import procedure. It is also possible to

take the view that the Company should have taken steps to surrender

the foreign exchange to the authorised person within the specified

time as provided in Regulation 6 of the Foreign Exchange

Management (Realisation, Repatriation and Surrender of Foreign

Exchange) Regulations, 2000 (for short, “the FEMA Regulations”)

issued by the Reserve Bank of India. The said regulation reads thus:

­

6. Period of surrender in certain cases: ­ (1) Any person
who has acquired or purchased foreign exchange for any
purpose mentioned in the declaration made by him to an
authorised person under sub­section (5) of section 10 of the
Act does not use it for such purpose or for any other purpose
for which purchase or acquisition of foreign exchange is
permissible under the provisions of the Act or the rules or
regulations or direction or order made thereunder, shall
surrender such foreign exchange or the unused portion
thereof to an authorised person within a period of sixty days
from the date of its acquisition or purchase by him.
(2) Notwithstanding anything contained in sub­regulation (1),
where the foreign exchange acquired or purchased by any
person from an authorised person is for the purpose of foreign
travel, then, the unspent balance of such foreign exchange
shall, save as otherwise provided in the regulations made
under the Act, be surrendered to an authorised person­

(i). within ninety days from the date of return of the
traveller to India, when the unspent foreign exchange is in
the form of currency notes and coins; and
14

(ii). within one hundred eighty days from the date of
return of the traveller to India, when the unspent foreign
exchange is in the form of travellers cheques.”

The appellant has placed reliance on the text of Section 42 of the

FEMA Act to bolster his argument that only such person who was in

charge of the Company at the time the contravention was committed,

would be responsible for the action.

11. The High Court has opined that the contravention referred to in

Section 10(6) by its very nature is a continuing offence. We agree

with that view. It is indisputable that the penalty provided for such

contravention is on account of civil obligation under the FEMA Act or

the rules or regulations or direction or order made thereunder. If the

delinquency is a civil obligation, the defaulter is obligated to make

efforts by payment of the penalty imposed for such contravention. So

long as the imported goods remained uncleared and obligation

provided under the rules and regulations to submit Bill of Entry was

not discharged, the contravention would continue to operate until

corrective steps were taken by the Company and the persons in

charge of the affairs of the Company. The High Court has adverted to

the exposition in Chairman, SEBI Vs. Shriram Mutual Fund &

Anr.1. In this decision, while dealing with the question as to whether

mens rea is essential for imposing penalty for breach of civil
1 (2006) 5 SCC 361
15

obligations, the Court adverted to the dictum in Director of

Enforcement vs. M.C.T.M. Corporation Pvt. Ltd. & Ors.2, which in

turn had quoted the exposition in Corpus Juris Secundum, Vol. 85,

page 580, paragraph 1023, which reads thus: ­

“A penalty imposed for a tax delinquency is a civil obligation,
remedial and coercive in its nature, and is far different from
the penalty for a crime or a fine or forfeiture provided as
punishment for the violation of criminal or penal laws.”

In the same judgment, the Court has also taken note of the decision

in M/s. Gujarat Travancore Agency, Cochin vs. Commissioner of

Income Tax, Kerala, Ernakulam3, which had opined that the

intention of the legislature such as the one under consideration is to

emphasise the fact of loss of revenue and to provide a remedy for

such loss, although element of coercion is present in the penalty. In

Securities and Exchange Board of India vs. Cabot International

Capital Corporation4, the Court delineated principles as follows: ­

“47. Thus, the following extracted principles are summarised:
(A) Mens rea is an essential or sine qua non for criminal
offence.

(B) A straitjacket formula of mens rea cannot be blindly
followed in each and every case. The scheme of a particular
statute may be diluted in a given case.

(C) If, from the scheme, object and words used in the statute,
it appears that the proceedings for imposition of the penalty
are adjudicatory in nature, in contradistinction to criminal or
quasi­criminal proceedings, the determination is of the breach

2 (1996) 2 SCC 471
3 (1989) 3 SCC 52
4 (2005) 123 CompCas 841 (Bom)
16

of the civil obligation by the offender. The word ‘penalty’ by
itself will not be determinative to conclude the nature of
proceedings being criminal or quasi­criminal. The relevant
considerations being the nature of the functions being
discharged by the authority and the determination of the
liability of the contravenor and the delinquency.
(D) Mens rea is not essential element for imposing penalty for
breach of civil obligations or liabilities.

(E) There can be two distinct liabilities, civil and criminal,
under the same Act.”

As aforementioned, the contravention referred to in Section 10(6) of

the FEMA Act is a continuing actionable offence. If so, the Company

and the persons managing the affairs of the Company remain liable to

take corrective measures in right earnest. Considering the admitted

fact that the appellant took over the management of the Company on

22.10.2001 and was fully alive to the default committed by the

Company, yet failed to take corrective steps in right earnest. Notably,

being conscious of such contravention, the appellant had sought

indulgence of the authorities for more time. It must follow that the

appellant cannot now be heard to contend that no liability could be

fastened on him individually. Indeed, regulation 6 of the FEMA

Regulations provides for the period within which the foreign exchange

ought to be surrendered if the Company was not wanting to take

delivery of the goods imported. That, however, does not mean that

the contravention ceased to exist beyond the specified period. On the

other hand, after the specified period as predicated in regulation 6
17

had expired, it would be a case of deemed contravention until

rectified.

12. It is not the case of the appellant that he is not an officer or a

person in charge of and responsible to the Company for the conduct

of the business of the Company, as well as, the Company on or after

22.10.2001. Considering the fact that the appellant admittedly

became aware of the contravention yet failed to take corrective

measures until the action to impose penalty for such contravention

was initiated, he cannot be permitted to invoke the only defence

available in terms of proviso to sub­Section (1) of Section 42 of the

FEMA Act that the contravention took place without his knowledge or

that he exercised all due diligence to prevent such contravention. In

the reply filed to the show­cause notice by the appellant, no such

specific plea has been taken.

13. The appellant then invited our attention to the reply filed on

behalf of the Company on 27.1.2004 in which it is vaguely asserted

that on the date when the Memorandum of Understanding was

signed, no disclosure was made that the import was done under

EPCG licence and the obligations under the said licence remained to

be fulfilled. To get benefit of the proviso to Section 42(1), the

appellant should have pleaded and proved that the contravention took
18

place without his knowledge or that he exercised all due diligence to

prevent such contravention and made every effort to rectify the

contravention in right earnest.

14. Be that as it may, once it is held that the contravention is a

continuing offence, the fact that the appellant was not looking after

the affairs of the Company in the year 2000 would be of no avail to

the appellant until corrective steps were taken in right earnest after

his taking over the management of the Company and in particular

after becoming aware about the contraventions. The appellant has

placed reliance on the dictum of this Court in M/s. Hindustan Steel

Ltd. vs. State of Orissa5. This decision has been distinguished in

the case of Shriram (supra) as can be discerned from paragraph 34

of the reported judgment, which reads thus: ­

“34. The Tribunal has erroneously relied on the judgment in
Hindustan Steel Ltd. v. State of Orissa, (1969) 2 SCC 627 which
pertained to criminal/quasi­criminal proceedings. That
Section 25 of the Orissa Sales Tax Act which was in question
in the said case imposed a punishment of imprisonment up to
six months and fine for the offences under the Act. The said
case has no application in the present case which relates to
imposition of civil liabilities under the SEBI Act and the
Regulations and is not a criminal/quasi­criminal proceeding.”

We are in agreement with the view so expressed.

5 (1969) 2 SCC 627 (paragraph 8)
19

15. To sum up, we hold that no error has been committed by the

adjudicating authority in finding that the appellant was also liable to

be proceeded with for the contravention by the Company of which he

became the Managing Director and for penalty therefor as prescribed

for the contravention of Section 10(6) read with Sections 46 and 47 of

the FEMA Act read with paragraphs A­10 and A­11 (Current Account

Transaction) of the Foreign Exchange Manual 2003­04. The first

appellate authority and the High Court justly affirmed the view so

taken by the adjudicating authority.

16. Accordingly, this appeal fails and the same is dismissed with no

order as to costs.

……………………………, J
(A.M. Khanwilkar)

……………………………, J
(Dinesh Maheshwari)
New Delhi;

March 05, 2020.



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