Delhi High Court
V.K. Verma vs Enforcement Director on 8 December, 2014
Author: S. Muralidhar
IN THE HIGH COURT OF DELHI AT NEW DELHI
CRL.M.C. No. 953 of 2009
V.K. VERMA ..... Petitioner
Through: Mr. Mohit Mathur with
Mr. K.R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
WITH
CRL.M.C. No. 954 of 2009
C.K. VERMA ..... Petitioner
Through: Mr. Mohit Mathur with
Mr. K.R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
WITH
CRL.M.C. Nos. 953, 954, 955, 956, 957, 958, 959 & 969 of 2009 Page 1 of 13
CRL.M.C. No. 955 of 2009
M.K. VERMA ..... Petitioner
Through: Mr. Mohit Mathur with
Mr. K.R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
WITH
CRL.M.C. No. 956 of 2009
J.S. BASI ..... Petitioner
Through: Mr. Mohit Mathur with Mr. K.
R. Dogra, Mr. Atul Guleria,
Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
WITH
CRL.M.C. No. 957 of 2009
CRL.M.C. Nos. 953, 954, 955, 956, 957, 958, 959 & 969 of 2009 Page 2 of 13
M.S. BASI ..... Petitioner
Through: Mr. Mohit Mathur with
Mr. K. R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
WITH
CRL.M.C. No. 958 of 2009
K.S. BASI ..... Petitioner
Through: Mr. Mohit Mathur with
Mr. K. R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
WITH
CRL.M.C. No. 959 of 2009
D.S. BASI ..... Petitioner
Through: Mr. Mohit Mathur with
CRL.M.C. Nos. 953, 954, 955, 956, 957, 958, 959 & 969 of 2009 Page 3 of 13
Mr. K.R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
AND
CRL.M.C. No. 969 of 2009
CONTINENTAL CONSTRUCTIONS ..... Petitioner
Through: Mr. Mohit Mathur with
Mr. K.R. Dogra, Mr. Atul
Guleria, Mr. Raman M. Mathur,
Mr. Shahrukh Hussain,
Mr. Badar Mehmood and
Mr. Pankaj Verma, Advocates.
versus
ENFORCEMENT DIRECTOR ..... Respondent
Through: Mr. Kirtiman Singh, CGSC
with Mr. Waze Ali Noor,
Advocate.
CORAM: JUSTICE S. MURALIDHAR
ORDER
08.12.2014
1. These petitions challenge the order dated 23rd April 2002 passed by
the learned Additional Chief Metropolitan Magistrate („ACMM‟),
Patiala House Courts, New Delhi summoning the Petitioners in
Complaint No.310/1/2002 filed under Section 57 of the Foreign
Exchange Regulation Act, 1973 („FERA‟) for failure to pay the
penalty amount and the order dated 17th May 2003 passed by the
learned ACMM framing notice in respect of the said offence against
the Petitioners.
2. The background to the present petition is that a memorandum-cum-
show cause notice („SCN‟) dated 25th October 1989 was issued to
Continental Construction Limited („CCL‟) and its Directors in respect
of purported violations of Sections 9 (1) (a), 19 (1) (d) as well as 29
(1) (b) read with Section 68 FERA.
3. An adjudication order („AO‟) was passed by the Special Director on
15th October 1990 imposing different amounts of penalties upon CCL
and its Directors. Aggrieved by the aforementioned AO, appeals were
filed by the present Petitioners before the Appellate Tribunal for
Foreign Exchange („AT‟).
4. It is the case of the Petitioners that along with the appeals filed on
2nd November 1990, they had also filed applications for stay of the
enforcement of the AO i.e. the recovery of penalties. The appeals
along with the applications for stay were taken up by the AT on 26 th
May 1995. It is the case of the Petitioners that on that day the
Chairman of the AT heard the appeals and granted stay but that stay
order was somehow not communicated.
5. It appears that till 27th September 1999 the ED did not raise the
issue of failure to deposit the penalties. However, on that date it issued
a letter to CCL and its Directors stating that the penalty amount should
be paid within seven days from the date of receipt of the letter. In
response thereto, on 3rd January 2000, a reply was sent by CCL to the
ED reiterating that the AT had heard the stay applications as well as
the appeals on merits on 26th May 1995 and during the course of
hearing the AT had stayed the recovery of the penalty. It was,
however, mentioned in the said reply "no separate order has been
passed for stay as the Board would incorporate the stay order in the
decision itself." The above reply did not satisfy the ED which then
proceeded to file on 18th April 2002 complaints against the Petitioners
under Section 57 FERA before the learned ACMM for non-deposit of
the penalty amount as ordered by the AO.
6. On 23rd April 2002 cognizance was taken by the learned ACMM of
the offence under Section 57 FERA and summons were issued to the
Petitioners for 12th August 2002. It is at that stage the Appellants again
went before the AT with fresh applications reiterating that even earlier
they had filed stay applications and that on 26 th May 1995 the
Chairman, AT had granted stay but that the stay order was not
communicated. The fresh stay applications were heard by the AT on
8th July 2002 in the presence of the Deputy Legal Adviser, of the ED.
The following order was passed:
"Application has been filed for interim stay of the
recovery. Facts and circumstances have been
mentioned in the application filed today. Let this
matter be placed on 26th July, 2002. Till then the
recovery proceedings and the impugned order will
remain stayed."
7. Notwithstanding the said order passed by the AT, the proceedings
before the learned ACMM continued. On 10th March 2003, the
Petitioner appeared before the ACMM and submitted that since the
adjudication proceedings had not attained finality and were pending
before the AT, the accused should be discharged. On 17th May 2003,
the learned ACMM framed notice against the Petitioners under
Section 57 FERA. By order dated 15th September 2003, the AT
dispensed with pre-deposit in the appeals. By an order dated 29th
March 2008, the learned Sessions Judge stayed the proceedings in the
complaint case under Section 57 FERA till the disposal of the appeals
by the AT.
8. On 30th May 2008, the AT dismissed the Petitioners‟ appeals
against which the Petitioners filed appeals in this Court. On 23rd
September 2008, this Court restrained the ED from taking coercive
steps against the Petitioners during the pendency of the said appeals.
9. While the appeals before the Court in the adjudication proceedings
were pending, the present petitions were filed. On 2nd April 2009
while directing notice to issue in the petitions, the Court exempted the
Petitioners from their personal appearance in the trial Court.
10. It may be mentioned that on 4th December 2014, this Court first
allowed the appeals filed by the Petitioners in the adjudication
proceeding and set aside both the adjudication order dated 15th
October 1990, as well as the subsequent order of the Appellate
Tribunal.
11. Mr. Mohit Mathur, learned counsel for the Petitioners relied upon
the decision of this Court in Navin Kumar Kapoor v. Enforcement
Directorate 2009 [2] JCC 850 and submitted that in the facts and
circumstances of the present cases, the offence under Section 57
FERA is not attracted. On the other hand, it has been contended for the
Respondents that the said decision is distinguishable on facts and
would not apply to the present cases. It is submitted that inasmuch as
the cognizance of a complaint is taken by the learned ACMM even
prior to the formal stay order passed on 8th July 2002 by the AT, the
stay order taking cognizance cannot be interfered with and has to be
taken to its logical conclusion.
12. The facts relevant to the present cases are that although the AO
was passed on 15th October 1990, the order passed by the AT staying
recovery of the penalty amount was not passed till 26 th May 1995.
Then again admittedly the stay order was not formally communicated
to the parties. Although the ED appears to have not taken steps to
recover the penalties during this entire period, it woke up on 27th
December 1999 i.e. more than 9 years after the AO sanctioned the
recovery of the penalty amount. At this time, the Petitioners were
under a bona fide belief that the recovery of penalties had been stayed
by the AT on 26th May 1995. This was also conveyed to the ED.
13. After waiting for more than two years for the said reply, the ED
decided to initiate proceedings under Section 57 FERA at which stage
the Petitioners moved the AT again and obtained the formal order of
stay on 8th July 2002.
14. Turning to the facts in Navin Kumar Kapoor there was no stay
order between 5th March 2002 which was the date of AO in that case
and 23rd November 2002 when the AT granted the stay of said order.
In between the two dates, the ED had on 26th March 2002 filed the
complaint under Section 57 FERA. This Court on those facts held in
para 10 as under:
"10. It can be said that there was a failure to make
payment in terms of the adjudication order only till
such time the adjudication order has attained finality.
As long as the adjudication order is subject matter of
an appeal and an interlocutory order has been passed
concerning the payment of penalty, it cannot be said
that there was a failure to make the payment of the
penalty amount. However, if the adjudication order
attains finality, or there is no stay of such order by a
superior tribunal and there is no payment of the
penalty amount, it can possibly be said that there is a
wilful failure to make the payment. However, that is
not the position here."
15. The Court has found that the facts of Navin Kumar Kapoor are
similar to the present cases. There it was held that the offence under
Section 57 FERA would not be attracted and the present cases where
again the Petitioners have acted under the understanding that there was
a stay of the recovery of the penalty amount granted by the AT in
respect of which again the formal order was passed only on 8 th July
2002.
16. As clarified in Navin Kumar Kapoor if despite adjudication order
attaining finality no payment is made of the penalty amount then
certainly it could be said that Section 57 FERA is attracted. Here,
however, with there being definitely a clear stay order passed on 8 th
July 2002, there was no justification for the learned ACMM to have
proceeded to frame notice on 17th May 2003 against the Petitioners for
the offence under Section 57 FERA. It is possible that on the date of
taking cognizance of the offence on 23rd April 2002, the ACMM may
have been justified in proceeding with the order since the formal order
of stay was not yet passed but certainly once that order was passed
further proceedings ought not to have been continued.
17. In any event, with the subsequent developments there appears to
be no purpose served in keeping the proceedings under Section 57
FERA alive. It is urged by learned counsel for the Respondents that
the matters could be sent back to the learned ACMM for appropriate
orders to be passed in light of the subsequent developments. The Court
sees no purpose being served in doing that except that it would delay
the proceedings even further.
18. The Court is satisfied that in the present cases there is no ground
made out for continuing the proceedings under Section 57 FERA qua
the Petitioners.
19. Consequently, the impugned orders dated 23rd April 2002 passed
by the learned ACMM, Patiala House Courts, New Delhi summoning
the Petitioners in Complaint No.310/1/2002 filed under Section 57
FERA for failure to pay the penalty amount and the order dated 17 th
May 2003 passed by the learned ACMM framing notice are set aside.
The petitions are allowed with no order as to costs.
S. MURALIDHAR, J.
DECEMBER 08, 2014
dn
