IN THE HIGH COURT OF JUDICATURE AT MADRAS Reserved on : 29.04.2024 Pronounced on : 03.06.2024 CORAM:

THE HONOURABLE MR. JUSTICE G.K.ILANTHIRAIYAN W.P.No.16979 of 2021 and WMP.Nos.17983 of 2021 & 16475 of 2022

1.M/s.Midas Communication Technologies Pvt Ltd., Rep. By its authorised signatory Shirish Purohit, No.1, Nesamani Street, Thanthai Periyar Nagar, Kaiveli, Pallikaranai, Chennai 600 100

2.Shirish Purohit ... Petitioners Vs.

The Special Director, Directorate of Enforcement (Adjudication), Southern Regional Office, Shastri Bhavan III Block III Floor, 26, Haddows Road, Chennai 600 006 ... Respondents PRAYER: Writ Petition is filed under Article 226 of Constitution of India praying to issue a Writ of Certiorari calling for the records from the respondent in connection with the impugned order No.SDE/SRO/CEZO/01/2021 in File No.T-4/07/CEZO/SRO/2015 dated 17.06.2021 insofar as the petitioners have been found contravening the provisions of Section 7(1)(a) of Foreign Exchange Management Act, 1999 r/w regulation 9(1) and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and the penalty imposed in para 6 in respect of the alleged contraventions and the consequential impugned Demand Notice beaing File No.T-

5/SDE/SRO/CEZO-1/01/2021 dated 14.06.2022 and quash the same.

(Prayer amended vide order dated 21.07.2022 made in WMP.No.16476/2022 in WP.No.16979 of 2021)

For Petitioners : Mr.V.Prakash, Senior Counsel for Mr.K.Krishnamoorthy For Respondents : Mr.N.Ramesh, Senior Panel Counsel

ORDER

This writ petition has been filed challenging the order passed by the respondent dated 17.06.2021 thereby found that the petitioner contravened the provisions of Section 7(1)(a) of Foreign Exchange Management Act, 1999 r/w Regulations 9(1) and 13 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 and imposed penalty and also challenging the demand notice dated 14.06.2022.

2. The second petitioner formed the first petitioner and he is one of the Directors. Now the first petitioner has no operations, no revenues and no staff or employees. It is facing liquidation proceedings and the second petitioner is now an employee in some other company. It is facing liquidation after cancelled an order midway by the Bharat Sanchar Nigam Limited. It was challenged in the writ appeal in W.A.(MD).650 of 2010. The Hon'ble Division Bench of this Court found that the cancellation of order is illegal. The petitioner had exported goods to Brazil in the year 2004-2005 and the value of the order was about 10 million US dollars. This supply was made to a customer with whom the petitioners had an existing relationship and it was believed that the transactions will be honoured as done in the previous instances. Unfortunately, after supply of equipments, purchasing company went in doldrums and did not clear the goods from the port. The petitioners were caught in a bind as the equipments could not be brought back also and the port charges involved was also unaffordably high and the equipments also could not be used.

2.1 Though efforts were made to locate some alternate purchasers, but that also did not materialise and efforts were made through Indian Embassy at Brazil for recovery of the proceeds of the export and it was also not materialised. The Indian Embassy in Brazil confirmed that bringing back the uncleared material would cost more than the cost of the exported equipment. It was investigated by the respondent between the years 2003 and 2005 resulting in issuance of show cause notice dated 14.10.2015. On receipt of the same, the petitioners had submitted detailed explanation.

3. The learned Senior Counsel appearing for the petitioners submitted that during the period between March 2003 to June 2008, there were 39 invoices to different countries in different parts of the world. Without giving opportunity of hearing, the impugned order has been passed. It is clear violation of principles of natural justice. The authorised pe