Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(ATFP) 83

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
M/s Dove Marine Exports Pvt. Ltd. – Appellant
Versus
The Special Director, The Directorate of Enforcement, Hyderabad – Respondent
MP-FE-583/HYD/2019 (Exemp.) | MP-FE-582/HYD/2019 (A.D.) | FPA-FE-87/HYD/2019 | FPA-FE-55/HYD/2023

Advocates:
For the Appellants/Petitioners: Mr. T. Sundar Ramanathan, Adv., Ms. Sukanya Viswanathan, Adv.
For the Respondents:Mr. Mohd. Wasay Khan, Advocate

Penalties for contraventions under FEMA must be strictly adhered to, regardless of intent; non-compliance with export declaration for repossessed assets constitutes a violation.

Headnote:(A) Foreign Exchange Management Act, 1999 - Sections 6(3)(d), 7(1), and 42(1) - Penalties imposed on M/s Dove Marine Exports Pvt. Ltd. and its Managing Director for violations regarding trade credit and export declaration compliance - Total penalties: Rs. 1,23,00,000/- on the Company and Rs. 5,50,000/- on the Managing Director, later reduced to Rs. 12,00,000/- and Rs. 50,000/- respectively. (Paras 1, 36, 39)

(B) Jurisdiction of Authorities - The Tribunal upheld the competency of the Enforcement Directorate Officers for adjudication under FEMA, negating Appellants' claims regarding jurisdictional barring. (Para 19)

(C) Export Definition and Compliance - Court determined that the export requirements under FEMA included vessels repossessed due to loan defaults, establishing the Appellants' liability for failing to declare them and comply with provisions. (Paras 5.14, 5.18)

(D) No Excuse for Non-compliance - The argument of operational impossibility was rejected as insufficient to evade compliance under FEMA, emphasizing the necessity of adherence to statutory requirements. (Paras 12, 38) (E) Result - The Appeals were partly allowed with the penalties adjusted based on compliance and previously made pre-deposits. (Para 40)

Table of Content
1. appellants dispute authority and jurisdiction. (Para 4 , 5 , 6 , 7)
2. contention on regulatory compliance regarding the loan. (Para 8 , 9)
3. intent of the parties and reliance on loan terms. (Para 10)
4. respondent's argument regarding authority and jurisdiction. (Para 11 , 12 , 13)
5. citations asserting the applicability of fema. (Para 14 , 15 , 16 , 17)
6. examining fema jurisdiction extended. (Para 18 , 19 , 22)
7. interpretation of eez and jurisdictional authority. (Para 20 , 21)
8. nature of contraventions established. (Para 23 , 24 , 25 , 26 , 27 , 28)
9. loan compliance and notified guidelines. (Para 29 , 30 , 31 , 32 , 33)
10. judicial precedent on penalties established. (Para 34 , 35 , 36 , 37)
11. final decision on penalties imposed. (Para 38 , 39)
12. conclusion and order of the tribunal. (Para 40)

FINAL ORDER

29.01.2026

This Order disposes of the Appeals Nos. FPA-FE-87/HYD/2019 filed by M/s Dove Marine Exports Pvt. Ltd. (DMEL) and FPA-FE- 55/HYD/2023 filed by Shri Pentapati Lakshman Swamy, against the Order No. SDE/SRO/HYZO/03/2019(SK) dated 27.09.2019 (Impugned Order), passed by the Special Director, Enforcement Directorate, Government of India, Chennai. The Ld. Adjudicating Authority (AA) imposed the cumulative penalty of Rs. 1,23,00,000/-

on the Appellant Company comprising of the following:

a. Rs. 24,00,000/- for the contravention of Section 6 (3) (d) of the Foreign Exchange Management Act, 1999 ( FEMA ) read with Regulation 6 of Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations, 2000 to the extent of US $ 16,80,000 (Rs. 7,79,85,600/-).

b. Rs. 14,00,000/- for the contravention of Section 7 (1) of FEMA read with Regulation 3 of the Foreign Exchange Management (Export of Goods and Services) Regulations 2000 to the extent of US $ 10,40,000 (Rs. 4,82,76,800/-).

c. Rs. 85,00,000/- for the contravention of Regulation 14 C of Foreign Exchange Management (Export of Goods and Services) Regulations 2000 to the extent of US $ 61,31,529 (Rs. 28,46,25,576/-).

The individual Appellant Shri Pentapati Lakshman Swamy, who was the Managing Director of the Company was penalized for the aforementioned contraventions in terms of Section 42 (1) of FEMA . Correspondingly the penalty amounts imposed on him were Rs. 2,00,000/-, Rs. 1,50,000/- and Rs. 2,00,000/- totaling Rs. 5,50,000/-.

2. This Tribunal vide Order dated 01.09.2023 had directed the Appellants to make pre-deposit of 10% (approximately) of the penalty amount viz Rs. 12,00,000/- by the Appellant Company and Rs. 50,000/- by the individual Appellant. The Tribunal has recorded on 08.05.2024 that the said pre-deposit Order has been complied with. 3. Briefly, the facts of the case are that DMEL entered into a Vessel Management Agreement with M/s Ocean Grace Co. Pte Ltd., Singapore on 23.07.2004, in terms of which M/s Ocean Grace was required to purchase entire fish catch and other marine products from DMEL at mutually agreed price. It was further agreed that M/s Ocean Grace shall pay in advance for the vessels and for the mid sea bunkers / stores /provisions for fishing operations. The cost of such supplies shall be adjusted against the invoices raised by DMEL for the catches exported by them. M/s Ocean Grace, thereby shall adjust and deduct all the advance remittances & other payments made on behalf of DMEL to the suppliers of bunkers, baits, vessel maintenance & repairs and salaries to the foreign crew, etc. During the course of the investigation, it was revealed that the individual Appellant herein was in-charge of the Company and responsible for the conduct of business of the Company. The Company had obtained permission for the import of fishing Trawlers vide letter No. 21002/5/2003-FY (Ind) dated 17.09.2004 from the Ministry of Agriculture, Government of India. The Company also obtained Loan Registration No. 2004916 from the Reserve Bank of India (RBI) vide letter No. DESACS/BPSD/1112/04.61.19/2004-05 dated 09.02.2005. The Appellant Compan

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2026 Supreme(Online)(ATFP) 83

Penalties for contraventions under FEMA must be strictly adhered to, regardless of intent; non-compliance with export declaration for repossessed assets constitutes a violation.

Cases Referred (2)