Y S Chowdary v. Enforcement Directorate

respect of the said appellant holding them guilty for contraventions under section 8(3 and 8(4), of FERA with the aid of section 68(1) of FERA, 1973, in our view, is legally and factually sound and does not require any interference. …...

40. The appeals are disposed of with the observations that the findings of the Adjudicating Authority holding the appellant Sujana Steels Ltd. (Company) guilty under section 8 (3) and 8(4) of FERA and / appellants Y.S. Choudhary and appellant S.T. Prasad respectively guilty for contraventions of section 8(3) and 8(4) of FERA r/w with section 68(1) of FERA, 1973 are upheld and affirmed. n While the findings in respect of the appellant Jawahar Babu is set aside and his appeal is allowed. The order of the Adjudicating Authority in respect of imposition of penalties is modified and in case of the appellant M/s Sujana Steels Ltd. the amount of penalty imposed by the Adjudicating Authority i.e reduced from Rs. 4 crores to Rs. 1 crore while in the case of appellant Y.S. Choudhary and appellant S.T. Prasad the amount of penalties is reduced from Rs. 1 crore each to Rs. 30 lakhs each. The amount of penalties, if any deposited, by way of pre-deposit by the said appellants will be adjusted and the balance amount will be paid by the appellants within 2 months from the date of the communication of this order. The amount of pre-deposit, if any, by the appellant Jawahar Babu will be refunded to him after the expiry of the period of appeal by the respondent. The parties will bear their own costs.” (Emphasis added)

8. He places reliance on the judgment passed by the Hon‟ble Supreme Court in Director of Enforcement vs. M.C.T.M. Corporation Pvt. Ltd. and Others (1996) 2 SCC 471 and more particularly para 7 and 19 which reads as under:

before them, they do not try “an accused” for commission of “any crime” (not merely an offence) but determine the liability of the contravenor for the breach of his "obligations" imposed under the Act. They impose "penalty' for the breach of the "civil obligations' laid down under the Act and not impose any "sentence" for the commission of an offence. The expression "penalty' is a word of wide significance. Sometime, it means recovery of an amount as a penal measure even in civil proceedings. An exaction which is not compensatory in character is also termed as a "penalty'. When penalty is imposed by an adjudicating officer, it is done so in "adjudicator proceedings' and not by way of fine as a result of "prosecution" of an "accused' for commission of an "offence" in a criminal Court. Therefore, merely because "penalty' clause exists in Section 23(1)(a), the nature of the proceedings under that Section is not changed from "adjudicator' to "criminal' prosecution. An order made by an adjudicating authority under the Act is not that of conviction but of determination of the breach of the civil obligation by the offender. …….

19. So far as the amount of penalty is concerned, the appellate Board, as already noticed, has modified the amount of penalty as imposed by the Directorate of Enforcement. The learned Addl. Solicitor General, Mr. Tulsi, Submitted that the appellant has no objection to the waiving of the entire amount of penalty in so far as each one of the Directors is concerned, some of whom are reported to have died during the pendency of the proceedings in this Court but that the penalty imposed upon the Company on both the charges does not call for any interference, because of the inordinate delay in repatriation of the foreign exchange, which according to him has not been repatriated even till date as that failure on the part of the Company has deprived this country to use the foreign exchange to subserve the common good, all these years. Learned counsel for the respondents does not controvert that the foreign exchange which was receivable in India from Malaysia has not been repatriated even till date. We, therefore, in view of the submissions made at the Bar set aside the penalty imposed upon each of the Directors of the Company but maintain the penalty imposed upon the Company, as modified by the Appellate Board. The appeal succeeds and is allowed in the above terms. In the peculiar facts and circumstances of the case, the parties shall bear their own costs.”

9. To my mind, the learned senior counsel for the appellants has rightly placed reliance on the judgment in Director of Enforcement (supra). A perusal of the aforesaid quoted text indicates that the proceedings under the FERA Act are not criminal proceedings but are adjudicatory in nature. The Appellant Tribunal for Foreign Exchange is an adjudicatory body, which performs quasi-judicial functions and act as administrators and adjudicators. They are not „courts‟. While it is very much within their powers, to impose penalties for non-compliance of provisions of FERA, however, it does not lie within their domain to pronounce a person “guilty” of offences under the FERA Act.

10. I am of the view that pronouncing a person “guilty” has serious consequences and to adjudicate and give a finding of „guilty‟ lies within the exclusive domain of the competent courts of jurisdiction.

11. In this view of the matter, the penalty imposed by the Appellant Tribunal for Foreign Exchange on the appellants is upheld, however, the word “guilty” used in the entire order 02.06.2016 against the appellants is to be considered as “redacted”.

12. No other contention has been raised.

13. With these observations, the appeals are allowed to the extent of the above findings.

14. The appeals stand disposed of accordingly.