Sumesh Duggal vs Special Director Directorate Of Enforcement

Court
Delhi High Court

$~16
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Date of decision: 15.10.2026

# CNR No. DLHC010727292024
+ MISC. APPEAL(PMLA) 33/2024
SUMESH DUGGAL .....Appellant
Through: Mr.Harshit Sethi, Ms.Mansi
Tripathi & Mr.Arya Yadav,
Advs.

versus

SPECIAL DIRECTOR DIRECTORATE OF ENFORCEMENT
.....Respondent
Through: Mr.Vivek Gurnani, Panel
Counsel for ED with
Mr.Kanishk Maurya &
Mr.Ch.Abhinandan Patra,
Advs.

CORAM:
HON'BLE MR. JUSTICE NAVIN CHAWLA
HON'BLE MR. JUSTICE ARUN BHARDWAJ

NAVIN CHAWLA, J. (ORAL)
1. This appeal has been filed under Section 35 of the Foreign
Exchange Management Act, 1999 (in short, ‘FEMA’), challenging the
order dated 08.07.2024 passed by the learned Appellate Tribunal
under SAFEMA (hereinafter referred to as ‘impugned order’), in
appeal bearing No. FPA-FE-46/DLI/2017 titled Shri Sumesh Duggal
v. The Special Director, Directorate of Enforcement, Delhi , by
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Digitally Signed
By:REYMON VASHIST
Signing Date:17.10.2026
16:03:21

which the learned Appellate Tribunal was pleased to dismiss the
appeal filed by the appellant herein.
2. To give a brief background of the facts on which the present
appeal arises, on 30.05.2007, the officers of the
respondent/Enforcement Directorate searched the official and
residential premises of the appellant, including a company, namely,
M/s Duggal Forex Pvt. Ltd., wherein the appellant is one of the
Directors. In this search, it is alleged that certain foreign currency and
Indian currency worth of Rs. 11,00,000/-(Rupees Eleven Lakhs Only)
was recovered, which could not be explained by the appellant or the
company M/s Duggal Forex Pvt. Ltd.. Based on the said search and
recovery, Show Cause Notices were issued to the appellant and the
company. The same resulted in an adjudication order dated
30.03.2017 passed by the Adjudicating Authority, whereby the
appellant and the company were visited with penalties of Rs.
5,00,000/- (Rupees Five Lakhs Only) for contravention of Sections
3(1)(a) and 4 of the FEMA and Rs. 15,00,000/- (Rupees Fifteen Lakhs
Only) for contravention of Sections 10, 47 read with Section 42 and
Section 13(2) of the FEMA, respectively, and the amount recovered in
the search was directed to be confiscated.
3. Aggrieved by the said order, the company as well as the
appellant herein filed appeals before the learned Tribunal.

4. The learned Tribunal vide its Impugned Order, while allowing
the appeal filed by the company, dismissed the appeal filed by the
appellant herein.
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Digitally Signed
By:REYMON VASHIST
Signing Date:17.10.2026
16:03:21

5. The learned counsel for the appellant submits that the learned
Tribunal, in its Impugned Order, has found that the company has been
able to explain the foreign currency and the Indian currency seized
during the search operation and, therefore, exonerated the company of
any violation of the FEMA provisions. At the same time, without
giving any reasons and by a cryptic order, the learned Tribunal has
dismissed the appeal filed by the appellant herein.
6. On the other hand, the learned counsel for the
respondent/Enforcement Directorate submits that their case against the
appellant was not only based on the foreign currency and Indian
currency recovered during the search operation, but also on the
statements, including that of the appellant, recorded under Section 37
of the FEMA, the call records, and other material against the
appellant, which showed that he was dealing in foreign currency
without the requisite permissions.
7. We have considered the submissions made by the learned
counsel for the parties.
8. We shall first quote from the Impugned Order insofar as its
finding against the appellant is concerned, as under:
“Now, coming to Sumesh Duggal, the evidence
on record clearly reflects that he used to sell
US $ on premium rate to the officials/officers
of Nigerian High Commission.”

9. While the learned counsel for the respondent has taken us
through the facts of the case as recorded in the Impunged order, and
contended that the evidence which is referred to by the learned
Tribunal in the Impugned Order while narrating the facts of the case,
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Digitally Signed
By:REYMON VASHIST
Signing Date:17.10.2026
16:03:21

is, in fact, the evidence on record that has weighed with the learned
Tribunal in dismissing the appeal of the appellant herein, we do not
find the same being reflected in the Impugned Order itself. After
giving a brief narration of the facts, the learned Tribunal proceeded to
consider the appeal of the company and found that it had been able to
explain the foreign currency and Indian currency recovered during the
search operation. We quote the finding of the learned Tribunal as
under:
“5. After hearing the rival submission, I
have given my thoughtful consideration to the
same. As far as cash of Rs. 11,00,000/- is
concerned, the same is duly explained by the
appellants by way of tendering the statement
of account of M/s Duggal Forex Pvt Ltd.
which shows withdrawal of Rs. 5,00,000/- by
way of cheque no. 343741 for sum of Rs.
8,00,000/- by way of cheque no. 343746. The
sum of Rs. 11,00,000/- is stated to be out of the
said drawn amount of Rs. 13,00,000/-.
Accordingly, the said cash of Rs. 11,00,000/-
is not an unaccounted money in any manner
and is wrongly seized and ordered to be
confiscated.
Now, coming to the various foreign
currency notes found in the premises of M/s
Duggal Forex Pvt Ltd. and not tallying with
the record, appellant has stated that the said
amount is duly accounted for and produced
the record in support of his contention (as
referred by him in para no. 3 above), which
reflects that there is no contravention on the
part of M/s Duggal Forex Pvt Ltd. However,
perusal of the impugned order reflects that the
Adjudicating Authority has not considered the
said record and is silent on this aspect.
Therefore, on the basis of record submitted by
M/s Duggal Forex Pvt Ltd., the said company
has not committed any contravention, as there
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Digitally Signed
By:REYMON VASHIST
Signing Date:17.10.2026
16:03:21

is no irregularity in the account of the said
company.”

10. Having found the above in favour of the company, it was
incumbent on the learned Tribunal to discuss what further evidence it
found against the appellant for upholding the penalty imposed on the
appellant. These matters cannot be inferred from the Impugned Order.
Reasons for the order must be evident from its reading and cannot be
inferred.
11. Accordingly, we find that the dismissal of the appeal filed by
the appellant by the Impugned Order is without reasons.
12. We, therefore, set aside the Impugned Order passed by the
learned Tribunal and remand the matter back to the learned Tribunal
for fresh consideration.
13. The learned Tribunal shall remain uninfluenced by any
observation made against the appellant in its Impugned Order and
shall adjudicate the appeal of the appellant afresh and give reasons for
the same.
14. The parties shall appear before the learned Tribunal for further
th
directions on 10 December, 2026.
15. The appeal is disposed of in the above terms. There shall be no
order as to costs.



NAVIN CHAWLA, J



ARUN BHARDWAJ, J
OCTOBER 15, 2026 /rv/pb
Signature Not Verified
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Digitally Signed
By:REYMON VASHIST
Signing Date:17.10.2026
16:03:21