Remanded

Shri Dharmendara Daga v. Directorate of Enforcement

Karnataka HC8 Mar 2021MFA/8423/2016

Case brief

AI extract

What is this about?

The High Court set aside impugned orders from the Appellate Tribunal for Foreign Exchange which dismissed appeals against FERA/FEMA penalties. The court held that the single-member bench lacked jurisdiction to adjudicate penalties exceeding Rs. 5 lakhs under the relevant notification and remitted the matter for fresh consideration.

What did the court decide?

Impugned orders set aside; matter remanded to the competent Appellate Tribunal for reconsideration afresh in accordance with law.

Shri Dharmendara Daga Vs Directorate of Enforcement — Banking and Recovery | Karnataka HC (2021)

¶1

IN THE HIGH COURT OF KARNATAKA AT BENGALURU

¶2

DATED THIS THE 8^TH DAY OF MARCH, 2021

¶3

PRESENT

¶4

THE HON'BLE MRS. JUSTICE S. SUJATHA

¶5

AND

¶6

THE HON'BLE MR. JUSTICE P.N.DESAI

¶7

M.F.A. NO.8423/2016 C/W

¶8

M.F.A.NO.8424/2016 (FEMA)

¶9

IN M.F.A.No.8423/2016

¶10

BETWEEN:

¶11

Shri.Dharmendara Daga, S/o Daga, Aged 50 years, Proprietor, M/s.Mahaveer Bullions, 187/12, Layers Colony, Subhash Nagar, Mandya.

¶12

… Appellant

¶13

(By Sri. Kiran S Javali, Advocate and Sri.Chandrashekara K., Advocate)

¶14

AND:

¶15

Directorate of Enforcement, 3^rd Floor, “B” Block, BMTC, Shantinagar – TTMC, K.H.Road, Shantinagar, Bangalore – 560 027.

¶16

¶17

Rep by its Assistant Director.

¶18

... Respondent

¶19

(By Sri.P.Prasanna Kumar, Advocate)

¶20

This MFA is filed under Section 35 of the Foreign Exchange Management Act 1999, against the order dated 17.10.2016 passed in Appeal No.98/2006 on the file of the appellate tribunal for foreign exchange 15^th floor Hindustan Times House, K.G. Marg, New Delhi – 110 001, directing to make payment of penalty amount within 45 days from the date of receipt of this order failing which the respondent may recover the same in accordance with law. No order as to costs.

¶21

IN M.F.A.No.8424/2016

¶22

BETWEEN:

¶23

Shri.Naresh Jain, S/o Mohanlal, Major, Mahaveer Bullions, 104, C.T.Street, Bangalore – 560 002.

¶24

… Appellant

¶25

(By Sri. Kiran S Javali, Advocate and Sri.Chandrashekara K., Advocate)

¶26

AND:

¶27

Directorate of Enforcement, 3^rd Floor, “B” Block, BMTC, Shantinagar – TTMC, K.H.Road, Shantinagar, Bangalore – 560 027. Rep by its Assistant Director. ... Respondent

¶28

(By Sri.P.Prasanna Kumar, Advocate)

¶29

¶30

This MFA is filed under Section 35 of the Foreign Exchange Management Act 1999, against the order dated 17.10.2016 passed in Appeal No.97/2006 on the file of the appellate tribunal for foreign exchange 15^th floor Hindustan Times House, K.G. Marg, New Delhi – 110 001, directing to make payment of penalty amount within 45 days from the date of receipt of this order failing which the respondent may recover the same in accordance with law. No order as to costs.

¶31

These appeals coming on for Admission this day, S. SUJATHA, J ., delivered the following:

¶32

JUDGMENT

¶33

Since common and akin issues are involved in these appeals, these matters are clubbed, heard together and disposed of by this common judgment.

¶34

This is the second round of litigation before this Court. The undisputed facts are that, on 23.03.2004, the respondent inspected the business premises of Mahaveer Bullions situated at No.104, CT Street, Bangalore on the basis of information that one Naresh Jain has received payments locally as per instruction of a person residing outside India in the said

¶35

¶36

business premises in breach of the provisions of Foreign Exchange Management Act, 1999 (‘FEMA’ for short). During the course of search, cash of Rs.2.50 lakhs was recovered from one Mr.Kantial and another sum of Rs.46.00 lakhs in cash from safe almirah. The statement of the appellant was recorded on 23.03.2004. A show cause notice was issued by the respondent on 21.09.2004 under section 16(3) of the FEMA for the alleged contravention of Section 3(c) of FEMA.

¶37

The order was passed by respondent on 30.09.2005 imposing penalty of Rs.12,00,000/- on Shri Naresh Jain to be deposited in the office of ‘Enforcement Directorate, Bangalore’ by means of Demand Draft in favour of ‘ The Deputy Director’ of Enforcement payable at Bangalore, within 45 days from

¶38

the date of receipt of that order and ordered for confiscation of the amount of Rs.48,50,000/- to the

¶39

¶40

Central Government Account U/s 17 (4) of the FEMA. Being aggrieved by the same, the appellant and Naresh Jain preferred appeals U/s 17(4) of the FEMA in Appeal Nos.97 and 98/2006 before the Appellate Tribunal for Foreign Exchange, New Delhi. The said appeals were allowed directing the respondents to refund the confiscated amount of Rs.48.50 lakhs to the appellant in Appeal No.98/2006 within 30 days after the receipt of the order. Aggrieved by the same, the respondent preferred MFA No.6797/2008 C/w MFA

¶41

No.6798/2008(FERA) before this Court.

¶42

The co-ordinate bench of this Court by order dated 1.8.2011 allowed the appeals setting aside the orders passed by both the authorities and remitted the matter back to the Appellate Tribunal for fresh consideration in accordance with law. Accordingly, Appeal Nos.97/06 and 98/06 stand restored to the file of the Appellate Tribunal as per the directions of this Court.

¶43

¶44

5. Pursuant to which, the Tribunal has passed

¶45

the impugned order dated 17.10.2010 whereby the appeals are dismissed. The appellant in Appeal No.97/06 has been directed to pay penalty amount within 45 days from the date of receipt of the order failing which the respondent may recover the same in accordance with law.

¶46

6. Being aggrieved, the appellants are before

¶47

this court.

¶48

7. Learned counsel for the appellants argued

¶49

that the matter was heard and disposed of by the Division Bench consisting of two learned Members, whereas now, the impugned order is passed by the learned Single Member of the Appellate Tribunal and on this aspect alone, the appeals are required to be allowed and the impugned order is liable to be set aside as the same is passed by single bench which has no

¶50

¶51

jurisdiction to adjudicate upon issues raised where the penalty imposed was exceeding Rs. 5 lakhs in terms of notification dated 22.03.2003 which was prevailing at the relevant period. Moreover, when the matter has been remitted by this Court, the matter ought to have been placed before the appropriate Bench in terms of the said notification. Apart from this, the learned counsel for the appellant made an attempt to argue that the impugned order is cryptic and does not disclose the reasons for arriving at the decision, the flaw which was earlier observed by this court at the first instance remains uncured. Learned counsel also made an endevour to address the arguments on the merits of the case.

¶52

8. We are not inclined to consider the matter on

¶53

merits of the case at this juncture as the learned counsel for the respondent is not able to convince this court inasmuch as the jurisdiction of the learned single member of the Tribunal in passing the impugned order

¶54

¶55

having regard to the notification aforesaid and the judgment of this court dated 1.08.2011 passed in MFA Nos.6797 and 6798/2008. As the question of jurisdiction goes to the root of the matter, any order passed by the tribunal not in conformity with the relevant provisions becomes unsustainable. We are of the considered view that the matter requires re-consideration by the tribunal. Hence, on this ground alone, without going into the merits of the case, the impugned orders are set aside. The matter is restored to the file of the competent Appellate Tribunal exercising the functions of the Appellate Tribunal under the Act, to re-consider the matter afresh in accordance with law.

¶56

All the rights and contentions of both the parties are kept open.

¶57

The competent Appellate Tribunal shall re-consider the matter and dispose of the same in accordance with

¶58

¶59

law. It is made clear that any amount confiscated and penalty imposed is not disturbed at this stage.

¶60

SD/JUDGE

¶61

SD/JUDGE

¶62

Shri Dharmendara Daga v. Directorate of Enforcement

Case brief

What is this about?

What did the court decide?

Shri Dharmendara Daga v. Directorate of Enforcement

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

Parties & counsel

Coram

Case details

Similar cases

R.S.Biradar Vs the State of Karnataka

State by Vs Ramesh

The Director Vs Sri T K Pratap Kumar

R. Raghurama Reddy Vs State Bank of India

Smt. Kowsalya Vs State Bank of India

Smt Chikkathayamma Vs Marigowda