Full Judgment Text
NONREPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL Nos.40234025 OF 2019
(Arising out of S.L.P.(C) Nos.3217732179 of 2017)
Maars Software International Ltd.
& Anr. ….Appellant(s)
VERSUS
Union of India & Ors. ….Respondent(s)
J U D G M E N T
Abhay Manohar Sapre, J.
1. Leave granted.
2. These appeals are filed against the final
judgment and order dated 18.04.2017 passed by
the High Court of Judicature at Madras in Civil
Signature Not Verified
Digitally signed by
ANITA MALHOTRA
Date: 2019.04.22
17:18:02 IST
Reason:
Misc. Appeal Nos.1997 & 1998 of 2010 and Writ
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Petition No.15793 of 2010 whereby the High Court
allowed the Civil Miscellaneous Appeals filed by the
respondents herein and dismissed the writ petition
filed by the appellants herein.
3. A few facts need mention hereinbelow for the
disposal of these appeals, which involve a short
point.
4. Appellant No.1 herein is a Limited company
having its registered office at Chennai and Appellant
No.2 is its Managing Director. The appellant
Company is engaged in the business of software
exports. The appellantCompany has also
specialized in the area of Enterprises Resources
Planning (ERP) implementation. The appellant
Company is offering their services to domestic and
overseas customers.
5. The Enforcement Directorate, Mumbai through
its Assistant Director filed a complaint, being
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complaint No.T3/536B/2002, under Section 16 (3)
of the Foreign Exchange Management Act, 1999 (for
short “FEMA”) against the appellantCompany
before the Special Director of Enforcement Mumbai
(Adjudicating Authority).
6. The complaint was founded on the material
collected during the course of detailed investigation
made in the affairs and the dealings of the
appellantCompany in their business operations. It
was done pursuant to the directive issued by the
competent authority on 23.11.2001 to the
appellantCompany under FEMA.
7. The aforesaid directive was issued to examine
the genuineness of the internal affairs of the
appellantCompany and also with a view to verify
various international dealings and business
operations which the appellant had executed during
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the relevant period with their overseas customers
involving huge foreign exchequer.
8. The investigation also centered around the
details of the Directors and Promoters; their
holdings; how many groups and associates
companies were formed by the appellants in India
and abroad for doing business; details of the share
transactions between the promoters of the
appellantCompany and OCB/FIIs/Sub
accounts/NRI; the details of the appellant’s brokers
appointed in the trade for execution of their
business contracts; and lastly, the details of loans
raised by the appellantCompany for their business
purpose etc.
9. The complainant, i.e., the Enforcement
Directorate prayed in the complaint that the
investigation carried out has clearly made out a
case of violation of Section 8 of FEMA read with
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Regulation 3 of the Foreign Exchange Management
(Realization, Repatriation and Surrender of Foreign
Exchange) Regulations, 2000 read with Regulation 9
of the Foreign Exchange Management (Export of
Goods and Services) Regulations, 2000 and also
violation of Section 42 (1) of FEMA by the appellant
Company. The complainant, therefore, prayed that
action, as contemplated under FEMA, be taken
against the appellantCompany for such violations
as provided under FEMA.
10. It is this issue, which was adjudicated by the
Special Director. By order dated 13.03.2008, the
Special Director allowed the complaint and held
that the appellantCompany has contravened the
provisions of FEMA as prayed in the complaint and
accordingly imposed a penalty of Rs.4 crores on the
appellant No.1Company and Rs.1 crore on
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appellant No.2Managing DirectorShri
Varadharajan as provided under FEMA.
11. The appellants felt aggrieved by the
aforementioned order and hence filed two appeals
under Section 13 of FEMA in the Tribunal. By order
dated 07.01.2010, the Tribunal allowed the appeals
and set aside the order dated 13.03.2008 and
directed the authorities to refund the amount which
was deposited by the appellants in these
proceedings for filing the appeals.
12. The Union of India felt aggrieved by the order
of the Tribunal and filed appeals in the High Court
under Section 35 of the FEMA whereas the
appellants herein filed a writ petition in the High
Court against the Union of India and sought therein
a writ of mandamus claiming refund of the pre
deposit amount.
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13. By impugned order, the High Court allowed
the appeals, set aside the order of the Tribunal and
restored the order of the Adjudicating Authority. As
a consequence thereof, the appellants’ writ petition
was dismissed.
14. It is against this common impugned order of
the High Court, the appellantCompany and its
Managing Director have filed these appeals by way
of special leave in this Court.
15. So, the short question, which arises for
consideration in these appeals, is whether the High
Court was justified in allowing the appeals filed by
the Union of India.
16. Heard Mr. Gopal Shankarnaraynan, learned
senior counsel for the appellants and Mr. B.K.
Satija, learned counsel for the respondents.
17. Having heard the learned counsel for the
parties and on perusal of the record of the case, we
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are inclined to allow these appeals and while setting
aside the impugned order remand the case to the
High Court for deciding the appeals afresh on
merits in accordance with law.
18. The need to remand the case (appeals) to the
High Court is called for because of the observations
made by the High Court in Para 15, which reads as
under:
“……….. N o material has been produced
before this Court as to what steps have been
taken to realize the amount within the
stipulated period. The company was not able
to place any material to show the reason for
the failure to realize the said amount within
the stipulated period or any permission for
extension of period has been obtained from
the RBI as contemplated under Section 42 of
the FEMA………..”
19. It was, however, brought to our notice from
Para 29 of the Tribunal's order, which was
impugned before the High Court in the appeals filed
by the Union of India, that the appellants had filed
material, which were marked as (Annexures A15 to
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A38) in the case, with a view to show as to what
steps they had taken to realize and repatriate the
dues in question.
20. In our considered view, keeping in view the
observations made by the High Court in Para 15, it
is clear that the High Court did not examine the
case of the parties in the context of material placed
by the appellants, though the Tribunal in Para 29 of
its order has considered the said material.
21. In our view, the High Court should have taken
into consideration the said material with a view to
decide as to whether it was relevant or/and
sufficient, and whether it could justify the
appellants’ case as contemplated under Section 8 of
FEMA.
22. Instead, the High Court seemed to have
proceeded on wrong assumption that since the
appellants did not file any material, a case was
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made out against them. This observation of the
High Court, in our view, was contrary to the record
of the case and hence, interference in the impugned
order is called for.
23. In view of the foregoing discussion, we are of
the view that the proper course in such a case
would be to remand the case to the High Court and
request the High Court to decide the appeal afresh
on merits in accordance with law.
24. In view of the foregoing discussion, the appeals
succeed and are accordingly allowed. The
impugned order is set aside. The case is remanded
to the High Court for deciding the appeals afresh on
merits in accordance with law keeping in view the
observations made above.
25. We, however, make it clear that we have not
expressed any opinion on the merits of the
controversy having formed an opinion to remand
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the case to the High Court on the grounds
mentioned above.
26. The High Court will decide the appeals
uninfluenced by any observation made in the
impugned order and in this order.
.………...................................J.
[ABHAY MANOHAR SAPRE]
…...……..................................J.
[DINESH MAHESHWARI]
New Delhi;
April 22, 2019
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