W.P.(C) No. 9864-71/2003

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IN THE HIGH COURT OF DELHI AT NEW DELHI

R-3.

+

W.P.(C) No. 9864-71 of 2003

M/S. GANESH POLYTEX LTD. & ORS. ..... Petitioners

Through: Mr. R.K. Virmani, Senior Advocate with

Mr. Nikhil Nayyar and

Mr. Ashish Kothari, Advocates.

versus

UNION OF INDIA & ORS.

..... Respondents

Through: None.

CORAM: JUSTICE S. MURALIDHAR

1. Whether Reporters of local papers may be

allowed to see the order?

No

2. To be referred to the Reporter or not?

Yes

3. Whether the order should be reported in Digest?

Yes

O R D E R

%

23.09.2010

1. The challenge in this writ petition under Article 226 of the Constitution is

to a show cause notice dated 4^th December 2003 issued by the Commissioner,

requiring the Petitioners to appear before the Adjudicating Officer/

Commissioner for a hearing on 17^th December 2003 pursuant to a

Memorandum issued by the Deputy Director, Directorate of Enforcement

(`DoE’) on 28^th February 2002 asking the Petitioners to show cause why they

should not be proceeded against for contravention of the provisions of Section

18(2) of the Foreign Exchange Regulation Act, 1973 (`FERA’).

2. The factual background is that during the years 1992-93, the Petitioner No.

1 Company effected shipment of goods valued at US $ 94814.20 under the

cover of GR forms to a party at Binapole in Bangladesh. The consignment

was of cotton yarn dyed cloth which was to be dispatched to M/s Azim

Garments Ltd. (`AGL’) at Dhaka. The consignment was booked for carriage

by M/s Transport Corporation of India Ltd. (`TCIL’). It is stated that TCIL

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W.P.(C) No. 9864-71/2003

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undertook, under the contract of carriage, to deliver the goods to AGL under

the order of Islami Bank Bangladesh, Dhaka. As regards the condition of

delivery, it was specifically notified by the carrier TCIL that the consignment

covered by the lorry receipt form shall be stored at the destination under the

control of TCIL and shall be delivered by the order of the consignee bank,

whose name was mentioned in the lorry receipt. The relevant documents in

regard to the goods sent to AGL through TCIL were negotiated by the

Petitioner No. 1 through the American Express Bank, New Delhi.

3. It is stated that for a long time thereafter Petitioner No. 1 did not receive

any payment or receive any advice about the retirement of the documents by

the consignee. Petitioner No. 1 accordingly made enquiries from TCL and the

banks but could not trace the whereabouts of the goods. Consequently

Petitioner No. 1 requested the bank to return the documents so that the goods

could be called back from TCIL. The bankers of the Petitioner No. 1 i.e., the

American Express Bank by their letter dated 9^th March 2003 requested the

Islami Bank Bangladesh that the unpaid documents be returned as the

acceptance and payment for the goods were not forthcoming.

4. Efforts were made by the American Express Bank again by writing on 8^th

May 1993 to the Bangladesh Bank to arrange for the payment through the

Islami Bank Bangladesh. Ultimately the Islami Bank, Bangladesh returned all

the documents to the American Express Bank by their letter dated 16^th June

1993. After having received the documents from the American Express Bank

on 12^th July 1993 the Petitioner No. 1 served a legal notice on TCIL informing

it that the goods were not delivered by TCIL as per the terms and conditions

of the contract. Since the export was not complete on account of the non-

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delivery of the goods by TCIL, no payment of foreign exchange was received

by the Petitioner No. 1 for the goods meant for export. In reply to the legal

notice dated 12^th July 1993, TCIL by its letter dated 22^nd July 1993 a