Kavita Dogra vs Director Of Enforcement, ...
2014 Latest Caselaw 257 Del

*    IN THE HIGH COURT OF DELHI AT NEW DELHI
R-11
+                CRL.A. 44 of 2008

        KAVITA DOGRA                                           .....Appellant
                   Through:                   Mr. Kaanan Kapur, Advocate.

                                 versus

        DIRECTOR OF ENFORCEMENT,
        ENFORCEMENT DIRECTORATE                 ..... Respondent
                     Through: Mr. Vineet Malhotra with
                              Ms. Manmeet Sethi, Advocates

      CORAM: JUSTICE S. MURALIDHAR

                                 ORDER

% 15.01.2014

1. This appeal by the Appellant, Ms. Kavita Dogra, is directed against

the impugned order dated 9th October 2007 of the Appellate Tribunal for

Foreign Exchange ('AT') dismissing Order-in-Appeal No. 54 of 2004

against the adjudication order (Original) dated 28th October 2003 passed

by the Deputy Director, Directorate of Enforcement, New Delhi alleging

contravention, during the period 1994-95, of Section 18 (2) of the

Foreign Exchange Regulation Act, 1973 ('FERA') for non-realization of

export proceeds by M/s. Kwality Jewellers (India) Pvt. Ltd. (hereinafter

referred to 'the company') of which the Appellant was a Director till 31st

May 1995.

2. The Directorate of Enforcement ('DoE') initiated the proceedings

under FERA by issuing a memorandum dated 28th September 2000 to the

company and its Directors/Managing Directors, i.e., Mr. L.R. Sridhar,

Managing Director, Mr. Dinkar Dogra, Ex-Managing Director, Mrs.

Kavita Dogra, Ex-Director (Appellant herein), Mr. Ashish Dogra, NRI

Director and Mr. Kiran Chimawar, Ex-Director.

3. The case of the Appellant was that she was not an active director of

the company and was not involved in any manner with the day-to-day

affairs of the company.

4. The Deputy Director, DoE, passed an adjudication order on 28th

October 2003 referring to the replies of the company and its directors

including the reply of the Appellant.

5. A perusal of the said adjudication order shows that there was no

separate consideration of the individual cases of each of the directors.

There is an omnibus finding to the effect that "export had taken place

when S/Shri Dinkar Dogra, Ashish Dogra, Kiran Chimalwar and Smt.

Kavita Dogra were responsible against whom the show cause notice was

issued, to realize the money.........." There was no application of mind to

the precise role and responsibility of the Appellant in the day-to-day

affairs of the company.

6. Even in the impugned appellate order dated 9th October 2007 the

discussion is about the roles of Mr. Dinkar Dogra and Mr.Kiran

Chimalwar, the other Directors. Although the appeal of the Appellant,

Mrs. Kavita Dogra, was also dealt with by the impugned appellate order,

there is no discussion of the facts relating to her.

7. Learned counsel for the Appellant submitted that the facts of the

present appeal were very different from those of Mr. Dinkar Dogra

whose Criminal Appeal No. 43 of 2008 against the same impugned order

dated 9th October 2007 of the AT was dismissed by this Court by an

order dated 4th June 2008. Relying on the decisions in Saroj Kumar

Poddar v. State (NCT of Delhi) AIR 2007 SC 912 and Satish Kumar

Bhalla v. Union of India (decision dated 26th February 2009 in

Crl.M.C. No. 5062 of 2006) it is submitted that in the absence of any

specific role attributable to Smt. Kavita Dogra in the memorandum, there

could be no finding of contravention of the provision of FERA as far as

she is concerned.

8. On the other hand Mr. Vineet Malhotra, learned counsel for the

Respondent submitted that the present case was covered squarely by the

decision dated 4th June 2008 in Criminal Appeal No. 43 of 2008. Since

the Appellant was admittedly a director of the company for the period

during which the contravention took place, the statutory presumption

under Section 68 of FERA stood attracted.

9. To begin with, the Court would like to observe that although Section

68 FERA is in the nature of a deeming provision, the proviso thereto

contemplates rebuttal of such presumption by a person who is able to

show that the contravention took place without his or her knowledge.

10. Section 68 FERA reads as under:

"68. Offences by companies - (1) Where a person committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder is a company, every person who, at the time of the contravention was committed, was in charge of, and was responsibile to, the company for the conduct of business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.

Provided that nothing contained in this sub-section render any such person liable to punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention."

11. The above provision is pari materia with Section 141 of the

Negotiable Instruments Act, 1881 ('NI Act'). In S.M.S.

Pharmaceuticals Limited v. Neeta Bhalla 2005 CrlLJ 4140 it was

emphasized by the Supreme Court that where a company is the accused

in a complaint under Section 138 NI Act, then in order to rope in any

other person with the aid of Section 141 NI Act, an averment must be

made in the complaint to the effect that such person was in charge of and

responsible for the conduct of the business of the company "at the

relevant time" when the offence was committed, and not on the basis of

merely holding a designation or office in a company.

12. In Saroj Kumar Poddar v. State the Supreme Court explained that it

is not sufficient to mechanically reproduce the language of the statutory

provision to say that all the directors of the company were incharge of

the day-to-day affairs and therefore, would be deemed to be guilty of the

offence. In particular it was pointed out in that case that "there was no

averment in the complaint petitions as to how and in what manner the

appellant was responsible for the conduct of the business of the

Company or otherwise responsible to it in regard to its functioning."

13. In the present case the memorandum is a cyclostyled form and the

averments as regards all the directors is identical. There is no specific

mention of the precise role of the Appellant in managing the day-to-day

affairs of the company. The case of the Appellant is different from that

of Mr. Dinkar Dogra. Prior to Mr. L.R. Sridhar taking over the

management of the company, Mr. Dinkar Dogra was the managing

director. The order dated 4th June 2008 passed by this Court dismissing

Mr. Dinkar Dogra's Criminal Appeal No. 43 of 2008 discusses in detail

the evidence showing Mr. Dogra to be incharge of the day-to-day affairs

of the company. There is no evidence to show in what manner the

present Appellant, Mrs. Kavita Dogra was responsible to the company

for the conduct of its business. As already noticed, neither the

adjudication order nor the impugned order of the AT discusses the facts

peculiar to the Appellant.

14. The Court is, therefore, satisfied that the DoE failed to make out a

case of contravention of Section 18 (2) FERA as far as the Appellant was

concerned. Neither the adjudication order nor the order of the AT in her

case are sustainable in law.

15. Accordingly, the adjudication order dated 28th October 2003 and the

impugned order dated 9th October 2007 of the AT are hereby set aside.

16. The appeal is allowed in the above terms.

17. The money, if any, deposited by the Appellant in this Court will now

be refunded to her in accordance with law within a period of four weeks

from today upon proper identification, together with the interest, if any,

accrued therein.

S. MURALIDHAR, J.

JANUARY 15, 2014 Rk