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2022 Supreme(Online)(Kar) 40938
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IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 11TH DAY OF AUGUST,2022
BEFORE
THE HON'BLE MR. JUSTICE KRISHNA S.DIXIT
WRIT PETITION NO.8432 OF 2018(GM-FE)
BETWEEN:
1. ORDYN TECHNOLOGIES PVT LTD.,
A COMPANY INCORPORATED UNDER THE
COMPANIES ACT 2956
HAVING ITS REGISTERED ADDRESS AT:
OZONE MANAY TECH PARK, 2ND FLOOR,
B WING, SY NO.56/18,
GARVEBHAVI PALYA, HOSUR ROAD,
BANGALORE 3 560 068.
REPRESENTED BY ITS MANGING DIRECTOR
MR.R VENKATESH.
2. R VENKATESH,
MANAGING DIRECTOR,
ORDYN TECHNOLOGIES PVT LTD.,
S/O V RAJAGOPALAN,
AGED 51 YEARS,
RESIDING AT 313, RANKA HEGIHTS,
4TH MAIN, 7TH CROSS, DOMLUR,
BANGALORE 3 560 071.
...PETITIONERS
(BY SMT. JAYNA KOTHARI, SENIOR COUNSEL A/W
SRI.ROHAN KOTHARI, ADVOCATE)
AND:
1. THE ASSISTANT GENERAL MANAGER,
RESERVED BANK OF INDIA,
FOREIGN EXCHANGE DEPARTMENT,
CENTRAL OFFICE, CENTRAL OFFICE BUILDING,
SHAHID BHAGAT SINGH MARG,
FORT, MUMBAI 3 400 001.
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2. THE CHIEF GENERAL MANAGER,
RESERVE BANK OF INDIA,
FOREIGN EXCHANGE DEPARTMENT,
5TH FLOOR, AMAR BUILDING,
FORT, MUMBAI 3 400 001.
3. THE DIRECTORATE OF ENFORCEMENT
BANGALORE ZONAL OFFICE,
3RD FLOOR, B BLOCK, BMTC BUILDING,
SHANTINAGAR, K H ROAD,
BANGALORE 3 560 027.
REPRESENTED BY ITS ASSISTANT DIRECTOR.
&RESPONDENTS
(BY SRI.R V S NAIK, SENIOR COUNSEL A/W
MISS.ADITHI SHETTY, ADVOCATE FOR R1 & R2;
SRI.M.B.NARGUND, SENIOR COUNSEL A/W
SRI.MADHUKAR DESHPANDE, ADVOCATE FOR R3)
THIS WRIT PETITION IS FILED UNDER ARTICLES 226
AND 227 OF THE CONSTITUTION OF INDIA, PRAYING TO
QUASH AND SET ASIDE THE NOTICE DATED 26.09.2013
PRODUCED HEREIN AS ANNEXURE-C ISSUED BY THE 1ST
RESPONDENT AND ETC.,
THIS PETITION HAVING BEEN HEARD AND RESERVED
FOR ORDER, THIS DAY, THE COURT PRONOUNCED THE
FOLLOWING:
First petitioner, a company incorporated under the
provisions of the erstwhile Companies Act, 1956 and the
second petitioner its Managing Director, are knocking at the
doors of Writ Court for assailing the notices dated 26.09.2013
& 9.12.2013 issued by the first respondent 3 Reserve Bank of
India, at Annexures-C & D. They also seek quashment of the
compounding order dated 22.08.2014 issued by the said
Bank at Annexure-K. They also seek to set aside all
proceedings initiated by the third respondent Directorate of
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Enforcement, pursuant to notice dated 9.2.2018 at Annexure-
S.
2.
After service of notice, the respondent-RBI has
entered appearance through its Panel Counsel who has filed
the Statement of Objections; the third respondent-ED is
represented by the learned CGC who too has filed the
Statement of Objections opposing the Writ Petition. Learned
Sr. Advocate appearing for the respondent-RBI and learned
Addl. Solicitor General of India appearing for the third
respondent
have
resisted
the
Writ
Petition,
making
submission in justification of the impugned notices & orders,
drawing attention of the court to the provisions of law and to
the Rulings.
3.
BRIEF FACTS OF THE CASE:
(a)
As already mentioned above, first petitioner is a
company incorporated on 28.07.1995 and second petitioner
happens to be its Managing Director. The Company was
engaged
in
the
manufacturing
of
telecommunication
equipments. <The company also had a wholly owned
subsidiary in Malaysia&= The subsidiary had borrowed
approximately Rs.20 plus crore from a financial institution
based in Malaysia way back in November 2008. The petitioner
company happen to be a corporate guarantor.
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(b)
The first respondent vide notice dated 26.09.2013
had raised some objections as to the corporate guarantee
alleging violation of contravention of regulation 6(2)(i) read
with regulation 2(o) of Foreign Exchange Management
(Transfer or Issue of any Foreign Security) (Amendment)
Regulations, 2004 [hereafter 82004 Regulations9]. The RBI
had
also
offered to
have compounding
of the said
contravention by moving an application, if so desired by the
petitioners. This notice having remained unanswered, the RBI
shooted another notice on 9.12.2013 substantially reiterating
the version of the earlier one.
(c)
The first petitioner company sent a letter dated
24.12.2013
seeking
extension
of
time
for
moving
compounding application pleading some difficulty. Extension
arguably having been granted, the application dated 9.1.2014
was also accepted by the RBI. The second respondent official
of the RBI passed the compounding order dated 22.08.2014
and imposed a fine of Rs.50,90,000/- (Rupees Fifty Lakh
Ninety Thousand) only. However, petitioners chose not to pay
the fine and eventually, the matter landed with the third
respondent
3
ED
who
has
shooted
the
impugned
notices/summons.
(d)
Petitioners9
representation
dated
9.12.2017
requesting the second respondent to recall the compounding
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order on the grounds pleaded therein remained unconsidered.
It is the case of petitioners that there is no contravention of
any law whatsoever and therefore, the impugned proceedings
need to be set at naught. Per contra, the respondent-RBI and
respondent-ED controvert the version of petitioners and seek
to justify the impugned proceedings.
4.
Having heard the learned counsel for the parties
and having perused the Petition Papers, this Court declines
indulgence in the matter for the following reasons:
(a)
The first petitioner admittedly being a company in
winding up, cannot maintain a petition on its own, as rightly
contended by learned Sr. Adv. Mr.Naik. The Apex Court in
SIRMUR CHEMICAL AND GENERAL INDUSTRIES LIMITED VS.
UNION OF INDIA, CIVIL APPEAL NO.12/1960 decided on 3rd
March, 1962 observed <&We do not think that Section 457 of
the Companies Act, 1956, or the corresponding provision in
the 1913 Act contemplates that on an order of winding up by
the court any person other than the liquidator shall have
