IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL Nos.3191-3194 OF 2011

(Arising out of SLP (Civil) Nos. 23374-23377 of 2008)

Thirumalai Chemicals Limited

….Appellant

Versus

Union of India & Ors.

..Respondents

J U D G E M E N T

K. S. PANICKER RADHAKRISHNAN, J.

Leave granted.

2.

The question that has come up for consideration in this

case is whether the Appellate Tribunal constituted under the Foreign

Exchange Management Act 1999 (in short FEMA) was right in

rejecting a belated appeal filed under Section 19 of FEMA, applying

the first proviso to sub section (2) of Section 52 of Foreign Exchange

Regulation Act 1973 (in short FERA), instead of following the proviso

to sub section (2) to Section 19 of FEMA.

3.

M/s Tirumalai Chemicals Limited (in short 'the Company')

had imported various consignments of benezene, orthoxalene etc. for

home consumption. For the said purpose, the Company had opened

Letters of Credit bearing No.MLCO 4359096 and No.529/960487 on

28.09.96 and 07.08.96 respectively on their bankers ICICI Bank and

Standard Chartered Bank (authorized dealers). By letters dated

07.12.96 and 18.01.97 Exchange Control Copies of bills of entry (in

short, ECC – bills of entry) in relation to those imports were forwarded

by the Company to the above mentioned Banks. As per the

provisions of Exchange Control Manual (in short ECM), the

authorized dealers had to submit the ECC-bills of entry submitted by

the importers (the Company) to the Reserve Bank of India (in short

RBI). The Company was under the bonafide impression that the

documents submitted by it were forwarded by the authorized dealers

to the RBI and that the RBI in turn had given due intimation to the

Enforcement Directorate. The Company on 22.04.2004 received a

telephonic communication from the office of the 3rd respondent viz.,

Directorate of Enforcement, stating that it had passed various orders

on 27.01.04 imposing a total penalty of Rs.9,33,63,453/- on the

Company on the ground that it had contravened the provisions of

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Sections 8(3), 8(4) of FERA read with sub-sections (3) and (4) of

Section 49 of FEMA. Copies of the orders dated 27.01.04 were then

received by the Company on 22.04.04 on request. From those

orders the Company came to know that the Directorate of

Enforcement had issued four show cause notices dated 14.05.02

stating that the Company had contravened Section 8(3), Section 8(4)

of FERA read with para 7A.20 (Chapter 7) of ECM and was required

to show cause why adjudication proceedings be not initiated against

the Company under Section 49 of FEMA for contravention of the

above mentioned provisions. Further, it was also stated that the

Company

had

failed

to

furnish

the

required

bills/information/documents and did not avail of the opportunity of

hearing in spite of notices issued to them on 29.08.02, 27.10.03 and

01.12.03. Orders dated 27.01.04 also indicated that an appeal would

lie before the Appellate Tribunal after depositing the amount of

penalty imposed within 45 days from the date on which the order was

served. Reference was also made to Section 19 read with Section

49(5)(a) of FEMA.

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4.

The Company on receipt of the above mentioned orders

dated 27.01.04 approached the authorized dealers and enquired

whether they had forwarded the ECC of bills of entry to the RBI as

required under the provisions of ECM. The ICICI Bank vide their

letters dated 12.05.04 informed the Company that it had received

ECC of bills of entry on 20.01.97 with difference of value. The ICICI

Bank then forwarded a letter dated 15.05.04 to the RBI seeking its

permission to accept the bills of entry stating that the Company had

submitted the relevant documents on 20.01.97 with shortfall of value.

The Standard Chartered Bank also vide their letter dated 12.05.04

informed the RBI that they had also rece