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2019 Supreme(SC) 476
SUPREME COURT OF INDIA
Abhay Manohar Sapre, Dinesh Maheshwari, JJ.
Maars Software International Ltd. & Anr. – Appellant(s)
Versus
Union Of India & Ors. – Respondent(s)
Civil Appeal Nos. 4023-4025 of 2019 (Arising Out of SLP (C) Nos. 32177-32179 of 2017)
Decided on : 22-04-2019
For the Appellant :Mr. Sumeer Sodhi, Advocate, Mr. Aman Nandrajog, Advocate, Mr. Ashish Tiwari, Advocate, Mr. T. Mahipal, Advocate, Ms. Aishwarya Kare, Advocate and Ms. Gayatri Verma, Advocate
For the Respondent:Ms. Shirin Khajuria, Advocate, Mr. B.K. Satija, Advocate, For Mr. B. Krishna Prasad, Advocates
IMPORTANT POINT
High Court has to examine case of parties in context of material placed on record by parties.
Headnote:Foreign Exchange Management Act, 1999 – Sections 8 and 42 – Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 – Regulation 3 read with Regulation 9 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 – FERA violations – Imposition of penalty on appellant-company – Order of Adjudicating Authority restored by High Court after reversing order passed by Tribunal – High Court did not examine case of parties in context of material placed by appellants – High Court seemed to have proceeded on wrong assumption that since appellants did not file any material, case was made out against them – Such observation of High Court was contrary to record of case – Interference in impugned order is called for – Impugned order set aside and case remanded to High Court for deciding appeals afresh on merits in accordance with law. (Paras 20 to 24)
Facts of Case:
FERA violations. Appellant-Company is engaged in business of software exports. Appellant-Company has also specialized in area of Enterprises Resources Planning (ERP) implementation. Appellant-Company is offering their services to domestic and overseas customers. Present appeals are filed against final judgment and order passed by High Court of Judicature at Madras in Civil Misc. Appeal Nos.1997 & 1998 of 2010 and Writ Petition No.15793 of 2010 whereby High Court allowed Civil Miscellaneous Appeals filed by respondents herein and dismissed writ petition filed by appellants herein.
Findings of Court:
Keeping in view observations made by High Court in Para 15, it is clear that High Court did not examine case of parties in context of material placed by the appellants, though the Tribunal in Para 29 of its order has considered said material.
Result : Appeals allowed.
JUDGMENT
Abhay Manohar Sapre, J.
Leave granted.
2. These appeals are filed against the final judgment and order dated 18.04.2017 passed by the High Court of Judicature at Madras in Civil Misc. Appeal Nos. 1997 & 1998 of 2010 and Writ Petition No. 15793 of 2010 whereby the High Court allowed the Civil Miscellaneous Appeals filed by the respondents herein and dismissed the writ petition filed by the appellants herein.
3. A few facts need mention here-in-below for the disposal of these appeals, which involve a short point.
4. Appellant No. 1 herein is a Limited company having its registered office at Chennai and Appellant No. 2 is its Managing Director. The appellant-Company is engaged in the business of software exports. The appellant-Company has also specialized in the area of Enterprises Resources Planning (ERP) implementation. The appellant-Company is offering their services to domestic and overseas customers.
5. The Enforcement Directorate, Mumbai through its Assistant Director filed a complaint, being complaint No.T-3/536-B/2002, under Section 16 (3) of the Foreign Exchange Management Act, 1999 (for short "FEMA") against the appellant-Company before the Special Director of Enforcement Mumbai (Adjudicating Authority).
6. The complaint was founded on the material collected during the course of detailed investigation made in the affairs and the dealings of the appellant-Company in their business operations. It was done pursuant to the directive issued by the competent authority on 23.11.2001 to the appellant-Company under FEMA.
7. The aforesaid directive was issued to examine the genuineness of the internal affairs of the appellant-Company and also with a view to verify various international dealings and business operations which the appellant had executed during the relevant period with their overseas customers involving huge foreign exchequer.
8. The investigation also centered around the details of the Directors and Promoters; their holdings; how many groups and associates companies were formed by the appellants in India and abroad for doing business; details of the share transactions between the promoters of the appellant-Company and OCB/FIIs/Sub-accounts/NRI; the details of the appellant's brokers appointed in the trade for execution of their business contracts; and lastly, the details of loans raised by the appellant-Company for their business purpose etc.
9. The complainant, i.e., the Enforcement Directorate prayed in the complaint that the investigation carried out has clearly made out a case of violation of Section 8 of FEMA read with Regulation 3 of the Foreign Exchange Management (Realization, Repatriation and Surrender of Foreign Exchange) Regulations, 2000 read with Regulation 9 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and also violation of Section 42 (1) of FEMA by the appellant-Company. The complainant, therefore, prayed that action, as contemplated under FEMA, be taken against the appellant-Company for such violations as provided under FEMA.
10. It is this issue, which was adjudicated by the Special Director. By order dated 13.03.2008, the Special Director allowed the complaint and held that the appellant-Company has contravened the provisions of FEMA as prayed in the complaint and accordingly imposed a penalty of Rs.4 crores on the appellant No. 1-Company and Rs. 1 crore on appellant No. 2-Managing Director-Shri Varadharajan as provided under FEMA.
11. The appellants felt aggrieved by the aforementioned order and hence filed two appeals under Section 13 of FEMA in the Tribunal. By order dated 07.01.2010, the Tribunal allowed the appeals and set aside the order dated 13.03.2008 and directed the authorities to refund the amount which was deposited by the appellants in these proceedings for filing the appeals.
12. The Union of India felt aggrieved by the order of the Tribunal and filed appeals in the High Court under Section 35 of the FEMA whereas the appellants herein filed a writ p
