S.K. Mittal vs Appellate Tribunal For Foreign ...
2009 Latest Caselaw 1883 Del

10.
*     IN THE HIGH COURT OF DELHI AT NEW DELHI


+     W.P.(C) 8355/2008 & CM No. 16019/2008


                                        Date of decision: 5th May, 2009

      S.K.MITTAL                           ..... Petitioner
                         Through Ms. Meenakshi Arora & Mr. Mohit D.
                         Ram,Advocates.

                    Versus


      APPELLATE TRIBUNAL FOR FOREIGN EXCHANGE..... Respondent
                     Through Ms. Monika Garg, CGSC. For the
                     respondent.


      CORAM:
      HON'BLE MR. JUSTICE SANJIV KHANNA

      1. Whether Reporters of local papers may be
      allowed to see the judgment?
      2. To be referred to the Reporter or not ?
      3. Whether the judgment should be reported
      in the Digest ?

                                ORDER

%

1. The petitioner Mr. S.K. Mittal is a Chartered Accountant, who has

been saddled with penalty of Rs.6,41,18,065/- for contravention of

Sections 8(1), 9(1)(a) and 9(1)(f)(i) of the Foreign Exchange Regulation

Act, 1973 (hereinafter referred to as the Act, for short). The petitioner has

W.P.(C) No. 8355/2008 Page 1 filed 178 appeals before the Appellate Tribunal for Foreign Exchange

challenging the penalty orders.

2. It is pointed out to me that about 500 show cause notices in all were

issued under the Act for violation of the aforesaid Sections. The

allegations against the petitioner are that he was instrumental in

introducing parties to whom payments were made through NRE accounts

after foreign currency were transferred/deposited in these accounts. The

petitioner is not a recipient but allegedly a broker who had arranged for

transactions made through these accounts for payment to the recipients.

NRE accounts are not in the name of the petitioner. Learned counsel for

the petitioner points out that in about 300 cases show cause notices were

dropped and no penalty order was passed. It is stated that in about 178

cases on identical facts the aforesaid penalty orders have been passed. It

is stated that there is wide disparity in the quantum of penalty imposed.

There is no criterion on the basis of which quantum of penalty has been

fixed.

3. I need not go into merits in detail in view of the limited controversy

before me. However it is apparent that the question of quantum requires

consideration. The impugned order subject matter of the present writ

petition dated 8th September, 2008 disposes of the application of the

petitioner seeking waiver of the pre-deposit with the condition that the

W.P.(C) No. 8355/2008 Page 2 petitioner will deposit 50% of the penalty amount or provide unconditional

bank guarantee in lieu thereof. In the case under reference and subject

matter of the order dated 8th September, 2008 penalty of Rs. 5 Crores has

been imposed. Learned Appellate Tribunal for Foreign Exchange while

passing the said impugned order has relied upon the fact that wife of the

petitioner is owner of property measuring 125 square yards at Chitranjan

Park. The impugned order does not refer to the assets of the petitioner

himself. The petitioner and his family are residing in the property. There

is no evidence or material to show that the petitioner had funded purchase

of the aforesaid property, which stands registered in the name of

petitioner's wife. The petitioner has filed on record copies of his income

tax return, in which annual income of about Rs. 3 lacs is disclosed. The

petitioner submits that the impugned order virtually takes away his right to

first appeal.

4. Petitioner has already deposited Rs.5 lacs with the Adjudicating

Officer. The petitioner states that he is ready and willing to deposit a

further sum of Rs.12,50,000/- with the Adjudicating Officer in two equal

installments. The said statement is accepted. The first installment of

Rs.2.5 lacs will be deposited by 30th May, 2009 and balance amount of

Rs.5 lacs each will be deposited on or before 31st July, 2009 and 30th

September, 2009 respectively.

W.P.(C) No. 8355/2008 Page 3

5. The petitioner will also file an affidavit and an undertaking before the

Adjudicating Officer giving complete details of his assets including bank

accounts. The petitioner will not dispose of his assets without permission

of the Appellate Tribunal for Foreign Exchange. He will be, however,

entitled to operate his bank accounts for his day-to-day needs. The

petitioner will file photocopy of his bank statement with the Adjudicating

Officer every month.

6. On the aforesaid deposits being made and affidavit and undertaking

being filed, the petitioner's appeals will be heard by the Appellate Tribunal

for Foreign Exchange. The impugned order dated 8th September, 2008 is

modified to the extent indicated above. The aforesaid order will equally

apply and govern 178 appeals, which are pending before the Appellate

Tribunal.

7. The present writ petition is accordingly disposed of. All pending

applications are also disposed of. The findings given in present order are

prima facie and tentative and the Appellate tribunal will decide the matter

on merits without being influenced by the findings given in this order.

DASTI.

SANJIV KHANNA, J.

      MAY 05, 2009
      VKR

W.P.(C) No. 8355/2008                                                     Page 4