Delhi High Court
N.K. Industries & Another vs Special Directorate Of ... on 19 May, 2009
Author: Sanjiv Khanna
5
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ W.P.(C) 3571/2007
N.K.INDUSTRIES & ANR . ..... Petitioner
Through: Ms. Maneesha Dhir & Ms. Preeti
Dalal, Advocates
versus
SPECIAL DIR.ENFORCEMENT FOREIG ..... Respondent
Through: Mr. Mayank Goel, Advocate.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
ORDER
% 06.05.2009 & 19.05.209
1. The petitioners M/s N.K. Industries Ltd. and Mr. Nimish K. Patel
by the present Writ Petition have challenged order dated 25.01.2007
passed by the Appellate Tribunal for Foreign Exchange disposing of
their application of waiver of pre-deposit with the direction that the
petitioner company shall furnish bank guarantee for penalty amount
of Rs. 25 lakhs and Mr. Nimish K.Patel director of petitioner company
will make pre-deposit of Rs. 5 lakhs.
2. The aforesaid penalty was imposed vide order dated
30.07.1999 on the allegation that N.K. Industries Ltd had entered
WPC NO.3571/2007 Page 1
into an agreement with Barsway Trading ltd, New York to settle their
disputes for a sum of USD 5,80,000/- and therefore, had violated the
provisions of Section 9(1)(c) of the Foreign Exchange Regulation Act,
1973 (hereinafter referred to as Act). The case of the petitioner is
that there was dispute between N.K. Industries Ltd. and Barsway
Trading Limited, New York which was pending before an Arbitrator.
It is stated that negotiations were in progress and a proposal was
made to settle the dispute. It is further stated that the petitioner
company had applied to Reserve Bank of India for making payment
through proper banking channel. It is, therefore, submitted by the
counsel for the petitioners that the petitioners had not resorted and
had no intention to resort to Hawala route or illegal transfer of
money. It is further stated that the proposal itself envisaged that the
agreement, if any, will be subject to the permission being granted by
the Reserve Bank of India.
3. It is pointed out that the petitioner company is a sick company
and proceedings are pending under the provisions of Sick Industrial
Companies (Special Provisions) Act, 1985.
4. At this stage, I need not go into merits and demerits in detail
as the first appeal is still pending before the Appellate Tribunal.
WPC NO.3571/2007 Page 2
However, I have noted the submissions made by the counsel for the
petitioners and prima facie find merit in the same.
5. Learned counsel for the petitioner states that the petitioner
no. 1 and petitioner no. 2 will furnish security of Rs. 25 lakhs and
Rs. 5 Lakhs respectively to the satisfaction of the Adjudicating
Officer, Mumbai. She further states that the Adjudicating
Officer/Enforcement Directorate will be entitled to encash the said
security in case the appeal filed by the petitioners is dismissed.
Security will be furnished within 4 weeks.
6.*1 The statement made by the counsel for the petitioner is
accepted. The petitioner No.1 will furnish security of Rs. 25 lacs and
the petitioner No.2 will furnish security of Rs. 5 lacs to the
satisfaction of the Adjudicating Officer, Mumbai. The Adjudicating
Officer/Enforcement Directorate will be entitled to encash the said
security in case the appeal filed by the petitioners is dismissed.
Security will be furnished within 4 weeks. The writ petition is
accordingly allowed to the extent indicated above and the impugned
Order dated 25th January, 2007 is modified. The findings and
observations made in this order are tentative and prima facie and the
1 th
Modified by Order dated 19 May, 2009
WPC NO.3571/2007 Page 3
Appellate Tribunal will decide the appeal without being influenced by
the observations made in this order.
SANJIV KHANNA, J.
MAY 06/19th , 2009.
Bsr/P
WPC NO.3571/2007 Page 4
