In two FERA appeals challenging a Tribunal's enhancement of penalties without a departmental appeal, the High Court held the Tribunal lacked power to enhance penalties suo motu. The Tribunal's order increasing penalties is set aside.
The Tribunal's order enhancing the penalty amounts is set aside.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
FERA APPEAL NO.49 OF 2008
Sanjay Khan, Managing Director,
M/s.World Resorts Ltd.
...Appellant
vs.
Sri A.K.Bal, Special Director.
...Respondent.
AND
FERA APPEAL NO.50 OF 2008
M/s.World Resorts Ltd.
...Appellant
vs.
Sri A.K.Bal,Special Director.
...Respondent.
Dr.V.V.Tulzapurkar i/b. Anil Menon & Associates, for
Appellant.
Mrs.S.V.Bharucha, for Respondent.
CORAM: D.K.DESHMUKH &
J.P.DEVADHAR, JJ.
DATED: 16th October,2008.
P.C.:-
1.
Admit. Heard finally by consent of parties.
2
By consent of parties the following question of law
is framed:-
“Whether the tribunal could have, while
hearing an appeal filed by the appellant
challenging the penalty imposed on them in
the absence of any appeal being filed or
cross objections being filed by the Revenue,
increased the amount of penalty ?”
2.The facts that are material and relevant for
deciding this question are that by order passed by
the Special Director dated 14.8.2003 under the
provisions of Section 50 of the FERA Act read with
Section 49(3) & (4) of the FEMA Act, imposing penalty
of Rs.45,00,000/- on the appellant in appeal no.50 of
2008 and penalty of Rs.30,00,000/- on the appellant
in appeal no.49 of 2008. Feeling aggrieved by that
order they filed two appeals before the Tribunal. One
appeal was appeal no.378 of 2003 which was filed by
Sanjay Khan - the appellant in the present appeal
no.49/08 and appeal no.379 of 2003 was filed by
M/s.World Resorts Ltd.- the appellant in the present
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appeal no.50/08. There was no appeal filed by the
department.
3.Perusal of the order shows that during the
course of hearing the Tribunal gave oral notice to
the appellants to show cause as to why the amount of
penalty should not be increased, and has proceeded to
increase the amount of penalty of Rs.3 crores 15
lakhs against the Company and the Managing Director
viz. appellants in both the appeals before the
Tribunal. The short ground on which the order is
challenged is that the Tribunal had firstly no power
to enhance the amount of penalty in the absence of
there being any appeal by the department, and
secondly, this could not have been done merely by
giving oral notice. It may be pointed out here that
the learned Counsel appearing for appellants stated
before us that so far as the penalty imposed by order
dated 14.8.2003 which was challenged before the
Tribunal is concerned, the appellants have paid the
amount of penalty and they have now no grievance
against that order. Therefore, now the only
question to be considered is “whether the tribunal
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can enhance the amount of penalty in the absence of
any appeal”. The learned Counsel appearing for
respondent fairly states that she does not find any
such provision in law empowering the Tribunal to
enhance the penalty suo-motto in the absence of any
application or appeal. In the absence of any such
power in the Tribunal, the Tribunal could not have
enhanced the penalty. The appeal is, therefore,
disposed of in terms of the following order:-
(i)The order of the tribunal, challenged in
both these appeals, enhancing the amount of penalty
are set aside.
(ii)It is clarified that the appellants do not,
any more, challenge the order dated 14.8.2003 passed
by the Special Director, and therefore, in case that
order is not complied with by the appellants, the
department will be entitled to enforce that order.
The appeals are disposed of.
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(D.K.DESHMUKH, J.)
(J.P.DEVADHAR, J.)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION
CIVIL APPLICATION NO.3103 OF 2008
IN
FERA APPEAL NO.49 OF 2008
Sanjay Khan, Managing Director,
M/s.World Resorts Ltd.
...Appellant
vs.
Sri A.K.Bal, Special Director.
...Respondent.
AND
CIVIL APPLICATION NO.3105 OF 2008
IN
FERA APPEAL NO.50 OF 2008
M/s.World Resorts Ltd.
...Appellant
vs.
Sri A.K.Bal,Special Director....Respondent.
Dr.V.V.Tulzapurkar i/b. Anil Menon & Associates, for
Appellant.
Mrs.S.V.Bharucha, for Respondent.
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CORAM: D.K.DESHMUKH & J.P.DEVADHAR, JJ.
DATED: 16th October,2008.
P.C.:-
In view of the order passed today i.e.
16.10.2008 by this Court in FERA Appeal nos.49/08 and
50/08, the present civil applications do not survive
for consideration, hence, disposed of.
(D.K.DESHMUKH, J.)
(J.P.DEVADHAR, J.)
3 issues framed by the court
Whether the Tribunal could enhance the penalty amount suo motu in the absence of any appeal by the Revenue?
Whether oral notice was sufficient ground to increase the penalty when no departmental appeal was filed?
Whether the Tribunal had the power to enhance penalty in the absence of an appeal by the department?
2 provisions across 2 enactments
Sanjay Khan
M/s.World Resorts Ltd
Sri A.K.Bal
D.K.Deshmukh
J.P.Devadhar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court