Dismissed

FPA-FE-53/DLI/2009 of Shri Sanjeev Wadhwa v/s The Special Director Directorate of Enforcement, Delhi

ATFP4 Oct 2017FPA-FE-53/DLI/2009

Case brief

AI extract

What is this about?

The Tribunal dismissed the applicants' applications for restoration of appeals and condonation of delay. The court held that the applicants failed to comply with prior directions regarding pre-deposit and bank guarantee, and their reasons for delay were vague and devoid of merits due to their conduct.

What did the court decide?

Application for restoration of appeal and condonation of delay dismissed. No sufficient cause shown.

FPA-FE-53/DLI/2009 of Shri Sanjeev Wadhwa v/s The… — Civil Procedure and Limitation | ATFP (2017)

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APPELLATE TRIBUNAL, FOREIGN EXCHANGE MANAGEMENT ACT AT NEW DELHI

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Date of Decision : 04.10. 2017

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(1) FPA-FE-52/DLI/2009

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M/s. Wadhwa Enterprises … Appellant / Applicant Versus The Special Director Directorate of Enforcement, Delhi … Respondent (2) FPA-FE-53/DLI/2009 Shri Sanjeev Wadhwa … Appellant / Applicant Versus The Special Director Directorate of Enforcement, Delhi … Respondent & (3) FPA-FE-54/DLI/2009 Shri Rajeev Wadhwa … Appellant / Applicant Versus The Special Director Directorate of Enforcement, Delhi … Respondent

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Advocates/Authorized Representatives who appeared

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For the Appellants : Ms. Sangita Bhayana, Advocate For the Respondent : Mr. Pankaj Yadav, Legal Consultant CORAM JUSTICE MANMOHAN SINGH : CHAIRMAN SHRI ANAND KISHORE : MEMBER

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JUDGEMENT

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FPA-FE-52/DLI/2009, FPA-FE-53/DLI/2009 & FPA-FE-54/DLI/2009

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In the instant case, an application under Section 3(a), 4, 8 & 42 of the Foreign Exchange Management Act, 1999 and Regulation No.5 (i) of Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 as well as an application under Section 5 of the

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FPA-FE-52, 53 & 54/DLI/2009

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Page 1 of 6

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Limitation Act for Condonation of delay in filing the restoration application has been filed on 21.01.2016.

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The facts of the case - as they emerge from the records are that by an order dated 17.02.2009 an amount of Rs. 5,00,00,000/- (Rupees Five Crores only) penalty had been imposed on M/s. Wadhwa Enterprises, personal penalty of Rs. 7,00,000/- (Rupees Seven Lakhs only) on Sanjeev Wadhwa and a personal penalty of Rs. 5,00,00,000/- (Rupees Five Crores only) each on Shri Sanjeev Wadhwa & Shri Rajeev Wadhwa, Partners in M/s. Wadhwa Enterprises under Section 13 (1) of Foreign Exchange Management Act, 1999 for having contravened the provisions of Section 3 (a) and 4 of FEMA, 1999 and absolute confiscation of foreign exchange namely US$.166, UK Pound 735, UAE Dirhams 305, Canadian $.750, French Francs 300, DM 200, Dutch Guilder 7000, US$.(TC) 400 and Indian currency amounting to Rs. 4,32,900 which had been seized from the business premises of M/s. Wadhwa Enterprises Room No. 10, Top Floor, K.C. House, WEA, Karol Bagh, New Delhi-110005 on 19.10.2000 under section 13(2) of FEMA, 1999 to the Central Government Account as the same is found to be involved in contravention of section 3(a), section 4 and section 8 of FEMA, 1999 read with Regulation 5 of Foreign Exchange Management (Realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000.

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Aggrieved by the said imposition of penalty of Rs. 15,07,00,000/(Rupees Fifteen Crores and Seven Lakhs Only) and confiscation of currencyreferred to above-, the appellant had filed an appeal for exempting from depositing the said penalty as pre-deposit before the appeal could be heard on merits.

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The above appeal filed by the appellant had been decided by this Tribunal in Appeal Nos. 52/2009 to 54/2009 by order dated 11^th May, 2009 which is - for the sake of convenience - reproduced below:

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Date : 11^th May, 2009 Appeal Nos. : 52/2009 to 54/2009 Appellants : M/s. Wadhwa Enterprises & Ors.

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FPA-FE-52, 53 & 54/DLI/2009

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Page 2 of 6

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Ms. Sangeeta Bhayana, Advocate vehemently argued in favour of three applications for dispensation of pre-deposit. By impugned order, the appellant firm in appeal No. 52/2009 is held guilty for Contravention of Section 3 (a), 4 and 8 of FEM Act, 1999. The other two appellants held guilty as partners of the appellant company. As per factual position, the Indian currency of Rs. 4,32,900/- and foreign currency US $ 814612.50 (including TCS), Can $ 126100 DM, 1587937, UE Dirham 566390, UK Pound 160465, SF 40022, FF 9300, HK $ 12440, Dutch Guilder 116243, SR 86900 Lira 196221, Yen 21830, Kuwaiti Dinar 1300, Omani Riyal 112, Bahrain Dinar 60, Aus. $ 5300, Malaysian $ 300 and Singapore $ 17 are recovered from the premises of appellant firm in appeal No. 52/09. Also some notings found in the seized documents are recovered where different amounts of foreign currency are described along with their respective rates. The total described amount of foreign currency is substantial which goes up to few lakhs. The recovered papers are 36 in numbers. The impugned order is passed holding the appellants guilty for Contravention of Section 3 (a) dealing in or transferring foreign currency. Also, the penalty is imposed for acquiring foreign currency in an authorized manner which is recovered from the appellants and not surrendering the same within a prescribed period.

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Ms. Sangeeta Bhayana, Advocate argued that restricted money changer license of the appellant is now cancelled and appellant firm has no license but when we questioned why the address of the closed business is given by the appellants in the memo of appeal, she could not give any satisfactory answer. It is a fact to be noted that appellants have not given their residential address in the memo of appeal but are pleading that after closing of firm’s business, they are procuring supply orders for making exports.

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The penalty amount for recovered foreign currency and not surrendering the same is Rs. 7 lakhs. But the penalty for dealing in or transferring foreign currency in violation of Section 3(a) of FEM Act, 1999 on the appellant firm along with partners is Rs. 5 crores each. There are no reasons given that why this high amount of penalty is imposed even when the total amount of foreign currency described in 36 pages is not counted. Thus, corelation in the violation of provisions of the Act and quantum of punishment is not faintly established.

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The matter with regard to undue hardship on the question of pre-deposit of penalty is well settled by the judgment of Apex Court in (1) Benara Valves Ltd. Vs. Commissioner of Central Excise 2006 (2) Scale 303 and; (2) Monotosh Saha v. Special Director, Enforcement Directorate; 2008 (11) Scale 603. In these judgments Hon’ble Supreme Court has held in short that dispensation should be allowed wherever impugned order is (1) ex facie bad which cannot withstand legal scrutiny; and (2) sufferance from financial disability. Further, in Monotosh Saha V. Special Director, Enforcement Directorate; 2008 (11) Scale 603 emphasis is also laid on the legal duty casted by Second Proviso of Section 19(1) FEM Act, 1999 upon this Tribunal so as to ensure recovery of the penalty by imposing suitable conditions.

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Looking towards this factual and legal position and more specifically the pleaded financial difficulty, we permit the appellants to deposit 20% of their respective penalty along with submission of unconditional bank guarantee of remaining 30%

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FPA-FE-52, 53 & 54/DLI/2009

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Page 3 of 6

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within a period of 45 days from today failing which these appeals will be dismissed on this ground alone. The remaining 50% amount of penalty is dispensed with subject to above compliance. These appeals are fixed for hearing on 28^th July, 2009.

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Aggrieved by the above decision by this Tribunal, the appellant had approached the Hon‟ble High Court for dispensation of pre-trial deposit through a Writ Petition which was dismissed on 17.11.2009 in default.

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In the meantime, by an order dated 05.09.2014 the appeal of the appellant had been dismissed. The decision of the Division Bench of Tribunal dated 05.09.2014 is as under:

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Dated : 05.09.2014 Appeal No.(s) : 52-54/2009 Appellants (s) : M/s. Wadhwa Enteprises Shri Sanjeev Wadhwa Shri Rajeev Wadhwa

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Taken up today. None responds for the appellants while Shri Rahul Meena, Legal Consultant is present on behalf of the respondent (Enforcement Directorate). Affidavit in terms of order dated 17.09.2009 passed an application for waiver of pre-deposit has not been filed by the appellants/petitioners. Copy of the order dated 17.11.2009 passed by the Hon’ble Delhi High Court in writ petition No. 10878/2009- Wadhwa Enterprises and Ors. Vs. UOI and Ors. has been filed by the respondent showing that the petition was dismissed in default. The demand noticed dated 23.07.2014 issued to the appellant has also been filed along with report of service that the above notices have shifted to some other place. The notice sent to Ld. Counsel representing the appellants has not been received back unserved. From the perusal of the order sheets it appears that several notices have been issued to the appellants and Ld. Counsel representing them but none could be served. It is apparent that the appellants have been avoiding the service of the notices. The appeals are of the year 2009. We have perused the impugned order also. It appears that the appellants have lost interest in further prosecution of the appeals. In this view of the matter the appellants are dismissed.

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In the present application for Restoration and Condonation of Delay, the applicant had pleaded that they were not aware of the decision of this Tribunal as they had not received any notice due to the reason that the premises of the appellant were lying locked and they had also shifted their residence.

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FPA-FE-52, 53 & 54/DLI/2009

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Page 4 of 6

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In Para 8 of its application the appellant has further submitted as under:

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“ Shri Rajeev Wadhwa has received the notice from the department on 13.01.2016 for deposit of the penalty amount of Rs. 5 Crores within 10 days of the receipt of the notice otherwise the department will take action against the appellant firm as per law. Copy of the demand notice dated 13.01.2016 is annexed herewith and marked as Annexure-A. It is only thereafter that he contacted his counsel on 15.01.2016 and his counsel on enquiry from the concerned officer of this Hon’ble Tribunal came to know that the appeal has been dismissed on 05.09.2014 by Hon’ble Mr. Justice V. K. Mathur, Chairperson and Hon’ble D. K. Mudgil, Member. The counsel for the appellant firm did not receive any notice from this Hon’ble Tribunal as her chamber shifted from Patiala House Court to Hon’ble High Court of Delhi. ”

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Even in the application for Condonation of Delay, the aforesaid reason i.e. the premises of the appellant firm lying locked and shifting of residence by the appellants as well as the chamber of the counsel of the appellant has been stated.

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As stated earlier, by an order dated 11^th May, 2009 this Tribunal had directed the appellants to deposit 20% of their amount of penalty along with submissions of unconditional bank guarantee of remaining 30% within a period of 45 days from 11^th May, 2009 failing which the appeal would stand dismissed on this ground alone. The appellant cannot be permitted to change its stand.

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The above directions of this Tribunal have not been followed by the appellant till date. No sufficient cause has been given by the appellant for not depositing the pre-deposit amount till date. It is also observed that the appellant was aware of the proceedings. It is further observed that the reasons given for Condonation of delay in filing the restoration application is rather vague and devoid of merits. As such, the above appeals/applications are dismissed. No sufficient cause has been shown in the applications. The grounds taken in the applications are vague and general in nature.

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However, in the interest of justice, equity and fairplay we still gave the offer to the appellant‟s counsel that in case the appellant complies with the

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FPA-FE-52, 53 & 54/DLI/2009

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Page 5 of 6

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order of this Tribunal dated 11.05.2009 and deposit 20% of their amount of penalty along with submissions of unconditional bank guarantee of remaining 30% within a period of 30 days from the date of this order, then this Tribunal would consider the request of restoring the appeal. There was no positive response on behalf of appellant counsel for the appellant is trying to raise the stay application again by stating that the penalty has been imposed incorrectly. Thus, there is no valid justification on behalf of the appellant. As such, the application for restoration for appeal and Condonation of Delay are dismissed.

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(Justice Manmohan Singh) Chairman

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(Anand Kishore) Member

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New Delhi, 04^th October, 2017

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„AS‟

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FPA-FE-52, 53 & 54/DLI/2009

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