Girish Gunjotikar, Sanjay Munshi ... vs Union Of India
2009 Latest Caselaw 5078 Del

#32, 33 & 34
*     IN THE HIGH COURT OF DELHI AT NEW DELHI
+     W.P.(C) 13668/2009, W.P.(C) 13669/2009 & W.P.(C) 13670/2009

      GIRISH GUNJOTIKAR
      SANJAY MUNSHI
      SHANGRILA LATEX INDUSTRIES LTD          ..... Petitioners
                        Through:  Mr. D.Ashok Rajagopalan with
                                  Ms.Madhu Tyagi, Advs.
                 versus

      UOI ETC                                 ..... Respondents
                            Through:        Ms. Rajdipa Behuria with Mr.Shravanth
                                            Shankar, Mr. Chinbhal Singh, Mr. Jeet
                                            Pathak, Mr. Sachin Datta and Ms.
                                            Deepti, Advs. for UOI.
                                            Mr. Atul Nanda and Mr. Gaurav Gupta,
                                            Advs. for R-2.

      CORAM:
      HON'BLE MR. JUSTICE SANJIV KHANNA

              ORDER

% 08.12.2009

With the consent of the parties, the matter is taken-up for final hearing as a limited and short issue is involved.

2 The petitioners Mr. Girish Gunjotikar, Mr. Sanjay Munshi and M/s. Shangrila Latex Industries Limited have filed the present Writ Petitions against the common order dated 1st October, 2009 passed by the Appellate Tribunal for foreign exchange disposing of their applications for waiver of pre-deposit under Proviso to Section 19(1) of the Foreign Exchange Management Act, 1999. By the impugned order, the applications filed by the two Directors for waiver of pre-deposit of penalty of Rs.5 lakhs imposed on Mr. Girish Gunjotikar and Rs.10 Lakhs imposed on Mr. Sanjay Munshi have been dismissed and in the case of M/s. Shangrila Latex Industries Limited waiver of

WPC Nos.13668-70/2009 Page 1 50% of penalty amount has been granted and the petitioner company has been asked to deposit penalty amount of Rs.7.5 lakhs. 3 Learned counsel for the petitioner submits that the impugned order does not notice that the adjudicating order itself records that the transactions/sales pertain to the year 1998 and, therefore, the Enforcement Directorate would not have imposed penalty under Foreign Exchange Management Act, 1999. It is further submitted that M/s. Shangrila Latex Industries Limited had received full value of the consignment from M/s. Steriltx Healthcare Private Limited and, therefore, the petitioners are not responsible for failure of Steriltx Healthcare Private Limited to ensure repatriation of the foreign exchange within the stipulated period. 4 The second aspect has been examined in the impugned order itself and it is noticed that the M/s. Shangrila Latex Industries Limited had signed the transfer or export documents. It may also be noticed that the petitioner company is a 100% export oriented unit and is under obligation to export it's entire production. It is further pointed out that failure to repatriate export proceeds is a continuing offence and, therefore, provisions under Foreign Exchange Management Act, 1999 have been rightly invoked even if the exports were made in 1998.

5 In view of the above explanations, it is difficult to accept that the impugned order passed by the adjudicatory authority is per se illegal or contrary to the provisions of Foreign Exchange Management Act, 1999. However, whether the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 would be applicable and to what extent will apply to exports made in 1998 is doubtful. Learned counsel for the petitioners has pointed out that in the case of Mr. Girish Gunjotikar penalty of Rs.5 lakhs has been imposed but in the case of Mr. Sanjay Munshi penalty of Rs.10 lakhs has been imposed without giving any justification and reason. It is submitted that

WPC Nos.13668-70/2009 Page 2 both of them were Directors and, therefore different penalties cannot be imposed without recording reasons and attributing different roles. It is pointed out that the petitioner company was declared to be a sick company under the provisions of Sick Industrial Companies (Special Provisions) Act, 1985 and pursuant to the order passed by BIFR, winding up proceedings, are pending before the Gujarat High Court. It is also stated that a provisional liquidator has been appointed. In these circumstances, it is stated that it is impossible for the petitioner company to deposit Rs.7.5 lakhs towards the penalty amount as a pre-condition to enable them to argue the appeal on merits.

6 Keeping these aspects in mind, it is directed that Mr. Girish Gunjotikar

will deposit Rs.5 lakhs within a period of one month from today and Mr.

Sanjay Munshi will also deposit Rs.5 lakhs and will furnish a bank guarantee

for balance amount of Rs.5 lakhs to the satisfaction of the Enforcement

Directorate within one month. The petitioner company will deposit the sum

of Rs.2.5 lakhs and will file an undertaking before the Appellate Tribunal that

they shall not transfer, alienate or encumber their properties without the

permission of the Appellate Tribunal and for the balance amount of the

penalty, the petitioner company will furnish security of his own assets or

assets of third party to the satisfaction of the Enforcement Directorate. It is

clarified that the security amount will be furnished for the entire balance

penalty amount of Rs.12.5 lakhs and not for the 50% of the penalty amount.

The aforesaid security will be furnished within a period of two months.

WPC Nos.13668-70/2009 Page 3 The impugned orders are modified to the extent indicated. The Writ Petitions are disposed of. No costs.

Observations made above are prima facie and for the purpose of deciding the present Writ Petitions and will not influence ld. Tribunal while deciding the appeals on merits.

Dasti under the signatures of the Court Master.

SANJIV KHANNA, J.

      DECEMBER 08, 2009
      J/P




      WPC Nos.13668-70/2009                                               Page 4