Telstar Travels Pvt. Ltd. Vs Special Director Enforcement Directorate

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K.J. IN THE HIGH COURT OF JUDICATRE AT BOMBAY
 CIVIL APPELLATE JURISDICTION

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(1) FERA APPEAL NO.8 OF 2008

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 Telstar Travels Private Limited )
 a company incorporated under the )
 Companies Act, 1956, having its )
 registered office at Mistry Court )
 208, Dinshaw Vachha Road, )
 Mumbai- 400 020 )..Appellant
 Versus
 Special Director, Enforcement )
 Directorate, Mumbai )..Respondents

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 ----

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(2) FERA APPEAL NO.9 OF 2008

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 Shri Arun N.Desai, Managing )
 Director of M/s.TELSTAR Travels )
 Private Limited, a Company )
 incorporated under the Companies )
 Act, 1956, having its registered )
 office at Mistry Court 208, )
 Dinshaw Vachha Road, Mumbai-20 )..Appellant
 Versus
 Special Director, Enforcement )
 Directorate, Mumbai )..Respondents

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 ----

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(3) FERA APPEAL NO.10 OF 2008

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 Shri Sujeet A.Desai, Age-42, )
 Director of M/s.TELSTAR Travels )
 Private Limited, a Company incorp-)
 orated under the Companies Act-1956)
 having its registered office at )
 Mistry Court 208, Dinshaw Vachha )
 Road, Mumbai-400 020 )..Appellant

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 Versus
 Special Director, Enforcement )
 Directorate, Mumbai )..Respondents

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 ----

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 : 2 :

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(4) FERA APPEAL NO.11 OF 2008

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 Shri Rajesh A. Desai, Director of )
 M/s.TELSTAR Travels Private Limited)
 a Company incorporated under the )
 Companies Act, 1956, having its )
 registered office at Mistry Court )
 208, Dinshaw Vachha Road, )
 Mumbai-400 020. )..Appellant
 Versus
 Special Director, Enforcement )
 Directorate, Mumbai )..Respondents

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 ----

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 Mr.Vikram Nankani with Madhur R.Baya for the
 appellants.

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 Smt.N.V.Masurkar with Shri S.M.Shah with
 H.P.chaturvedi for the respondents in FERA 8/2008.

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 Smr.S.V.Bharucha with M.I.Sethna with H.P.Chaturvedi
 for respondents in FERA 9/2008 to 11/2008.

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 ----
Coram : F.I.Rebello & R.S.Mohite,JJ

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 Date : 14.03.2008.

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Judgment :- ( Per : R.S.Mohite,J)

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 1. All the aforesaid appeals impugned a common
 judgment and order dated 28.11.2007 passed by the
 Appellate Tribunal for Foreign Exchange, New Delhi
 in four separate appeals filed by the four
 appellants before us. By the impugned judgment and
 order, the Appellate Tribunal for Foreign Exchange,
 partly allowed the appeals and modified an
 adjudication order dated 12.3.2001 passed by the Dy.
 Director, Directorate of Enforcement, Mumbai. By
 his order dated 12.3.2001 the Dy. Director,

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 : 3 :

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 Directorate of Enforcement, Mumbai had found that
 the appellants had contravened the provisions of

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 Sections 14 & 8 (1) of the Foreign Exchange
 Regulations Act 1973. On such finding, he had

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 imposed the following penalties :-

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 (a) On M/s.Telstar Travels (P) Ltd., Mumbai :
 Rs.90,00,000 (Rupees Ninety Lakhs only) for

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 contravention of Section 14 of FERA and a further
 amount of Rs.85,00,000/- for contravention of
 Section 8(1) of FERA ;

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 (b) On Shri Arun N.Desai, Managing Director : An
 amount of Rs.20,00,000/- (Rupees Twenty Lakhs only)

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 (c) On Shri Rajesh Desai : An amount of
 Rs.20,00,000/- (Rupees Twenty Lakhs only) ;

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 (d) On Shri Sujeet Desai : An amount of
 Rs.20,00,000/- (Rupees Twenty Lakhs only).

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 . The Appellate Tribunal, while upholding the
 charges and the finding relating to contravention of
 Section 14 and 8(1) of FERA, reduced the penalty
 amount by 50%. A common appellate judgment and
 order has thus being challenged by the appellants in
 these four appeals.

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 2. We have heard both the sides and perused the

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 : 4 :

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 record. The relevant facts which gave rise to the
 adjudication were as follows :-

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 (a) The appellant in FERA Appeal 8 of 2008
 M/s.Telstar Travels Pvt.Ltd., were inter alia travel
 agents conducting a ticketing business. Their major
 business was the booking of tickets for crew members
 working in ships. A request for booking a ticket
 was usually received by the company from a local
 shipping agent. Till about 1993, the local shipping
 agent used to produce the Foreign Inward Remittance
 Certificate which was endorsed and forwarded to the
 Airline authority for issuing the tickets. Since
 1993, however, the fares of airlines in India had
 become expensive and hence the shipping companies
 started booking the air tickets abroad. In such
 circumstances, the appellants deviced a modus
 operandi for purchasing air tickets abroad and
 supplying the same to their foreign clients.

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 (b) The appellant in FERA 11 of 2008 Mr.Rajesh Desai

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 who was the son of Mr.Arun M.Desai, the Managing
 Director of M/s.Telstar Travels Pvt.Ltd., entered
 into an agreement with a foreign travel agent by
 name M/s.Clyde Travel Ltd., of Glasgow. An account
 bearing A/c.No.10975 was opened in the name of the
 company registered in the British Virgin Islands
 Ltd., by name "M/s.Bountiful Ltd.," with Banque De
 Financement at Geneva, Switzerland. It was the case

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 : 5 :

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 of the authorities that the company M/s.Bountiful
 Ltd., was however, only a company on paper and the
 Geneva account of this Company was being operated by
 a person by name Mr. Shirish Shah, who was a
 Chartered Accountant operating from London and the
 said Mr.Shirish Shah was operating the account of
 M/s.Bountiful Ltd., only on instructions of
 Mr.Rajesh Shah.

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 (c) That on receipt of a request for a ticket made
 by the local shipping agents of the Foreign Shipping
 Company, a PTA was sent to the airlines by M/s.Clyde
 Travels Ltd., who paid for the ticket. M/s.Clyde
 Travels however, was paid adhoc amounts from time to
 time from the account maintained by M/s.Bountiful
 Ltd., This was done on instructions given to the
 Chartered Accountant Mr.Shirish Shah by Mr.Rajesh
 Desai, purporting to act as an Executive Director of
 M/s.Telstar Private Limited. It was further the
 case of the FERA authorities that the foreign
 account was nothing but an account, illegally
 operated, maintained and run by M/s.Telstar Private
 Limited and operated on the instructions of the
 appellants. It was their contention that Mr.Arun
 Desai was the Managing Director of M/s.Telstar
 Pvt.Ltd., right from 1976 onwards. In his statement
 he had admitted that his two sons i.e. the
 appellant Sujeet Desai and Rajesh Desai were
 authorised by him to run the business of the company

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 : 6 :

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 and to operate the bank account of the company.
 That they were projecting themselves as Executive
 Directors of M/s.Telstar Private Limited.

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 (d) In reply to the Show Cause Notice which was
 issued to them, the contention of the appellants was
 that M/s.Bountiful Ltd., was not a company on paper.
 That the Chartered Accountant Mr.Shirish Shah from
 London was a person known to M/s.Clyde Travels as
 well as Rajesh Desai. That under an agreement dated

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 1.8.1994, Telstar would inform Clyde about
 prospective passengers travelling from India to
 Overseas and back. In consideration of Telstar’s
 recommending such passengers to Clyde, Telstar was
 only entitled to be paid commission of about 3% on a
 quarterly basis alongwith a statement of ticket
 issued by Clyde. Clyde would normally sent invoices
 directly to the Indian clients but having regard to
 the voluminous nature of the invoices, quite often
 Clyde or its associate Bountiful Ltd., would forward
 the invoices to Telstar with a request for their
 onward transmission to their Indian clients.

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 3. We have perused the entire record. We find that

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 there is a concurrent findings of fact to the effect
 that the Geneva bank account standing in the name of
 Bountiful Ltd., was being operated on the directions
 of one of the appellant Mr.Rajesh Desai acting on
 behalf of M/s.Telstar. This finding of fact is

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 : 7 :

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 based upon voluminous material collected at the
 stage of investigation. While arriving at the
 finding of guilt, reliance was placed on the
 statements of Mr.Arun Desai dated 24.8.1995,
 25.8.1995 and 6.2.1996. These statements were
 obtained mainly to seek an explanation in relation
 to the documents seized vide panchanama dated
 14.4.1995. Reliance was also placed on the
 statements of the appellant Rajesh Desai recorded on
 24.8.1995 and 25.8.1995. The statement of Sujeet
 Desai was also recorded on 24.8.1995 and 25.8.1995.
 Out of the aforesaid statements, the statement made
 by Arun Desai was not retracted till the stage of
 giving the reply to the Show Cause Notice. It is
 the concurrent findings of the two lower authorities
 that these statements were not obtained under
 coercion. These statements recorded under Section
 40 of FERA confirmed the correctness of the
 departments’ allegation. It is also the finding
 that these statements stood corroborated by other
 evidence such as statement of Ms.Anita Chotrani,
 Travel Coordinator of one of the Indian agent of
 foreign shipping company and the statement of
 Mr.Deepak Raut, Director of M/s.Arvan Shipping
 Private Limited which was also an Indian agent of an
 overseas shipping company. The other materials,
 held to be corraborative are documents seized from
 the office of M/s.Telstar and the residential
 premises of its Managing Director Shri Arun Desai in

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 : 8 :

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 the course of a search under Section 37 of FERA.
 Indian currency of Rs.7,46,000/- was also seized in
 the course of this search. The Appellate Tribunal
 has observed that amongst the documents seized, were
 the invoices of Bountiful Ltd., which contained
 directions of M/s.Telstar to credit the amount of
 bill to account no.10975 of M/s.Bountiful Ltd., of
 Geneva and documents which reveals that several air
 tickets were also billed in these Bountiful invoices
 and payments of these tickets have been directed to
 be credited to the aforesaid Geneva account. The
 Appellate Tribunal has also placed reliance upon an
 enquiry report dated 15.1.1997 given by an officer
 of the Indian High Commission at London reporting on
 enquiry that Mr.Livinston, Managing Director of
 Clyde Travels Limited did not know Mr.Shirish Shah.

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 4. Considering all the aforesaid material, we feel
 that there is no question of law involved in these
 appeals. On the facts, the case has been decided on
 the basis of voluminous material available and it is
 not possible to draw an inference that the findings
 are perverse. We find that a substantial deduction
 of penalties has been effected by the Appellate
 Tribunal. In our opinion, this is not a fit case
 for interference and hence the aforesaid appeals are
 summarily dismissed.

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 : 9 :

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(R.S.Mohite,J) (F.I.Rebello,J)

Telstar Travels Pvt. Ltd. v. Special Director Enforcement Directorate

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Telstar Travels Pvt. Ltd. v. Special Director Enforcement Directorate

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