SUBORNO BOSE versus ENFORCEMENT DIRECTORATE & ANR.

SUBORNO BOSE versus ENFORCEMENT DIRECTORATE & ANR.

Section 10(6) applied because foreign exchange procured for import was not used to complete import formalities (Bill of Entry not submitted and goods warehoused); the contravention is continuing, and because the appellant, after becoming Managing Director, became aware of the default and did not take corrective steps or plead/prove lack of knowledge or due diligence, he is liable under Section 42(1) and the penalty imposed by the adjudicating authority and affirmed by the appellate authorities and High Court was correctly confirmed by the Supreme Court.

Parties
Appellant: Suborno Bose; Respondent: Enforcement Directorate & Anr.; Company: M/s Zoom Enterprises Ltd.
Jurisdiction
India
Judgment Date
05 March 2020
Procedural Posture
Civil Appeal / Appeal to Supreme Court From Calcutta High Court; Judgment on Merits Delivered by Supreme Court
Outcome
Appeal dismissed
Legal Topics
Section 10(6) FEMA Deeming Provision, Continuing Offence Under Section 10(6), Proviso to Section 42(1) Burden to Plead and Prove Lack of Knowledge or Due Diligence, Regulation 6 FEMA (realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000
Foreign Exchange Management Company Liability Administrative Law Section 10(6) FEMA Deeming Provision Continuing Offence Under Section 10(6) Proviso to Section 42(1) Burden to Plead and Prove Lack of Knowledge or Due Diligence Regulation 6 FEMA (realisation, Repatriation and Surrender of Foreign Exchange) Regulations, 2000

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Parties

Suborno Bose

Appellant

Enforcement Directorate & Anr.

Respondent

M/s Zoom Enterprises Ltd.

Company

Procedural Posture

Civil Appeal / Appeal to Supreme Court From Calcutta High Court; Judgment on Merits Delivered by Supreme Court

Legal Issues

  1. 1 Whether Section 10(6) of the FEMA Act was attracted to the facts of import kept in bonded warehouse without submission of Bill of Entry
  2. 2 Whether the contravention under Section 10(6) is a continuing offence rendering subsequent managers liable until corrective steps are taken
  3. 3 Whether appellant who became Managing Director after the initial contravention can avail proviso to Section 42(1) by showing contravention took place without his knowledge or that he exercised due diligence

Ratio Decidendi

Section 10(6) applied because foreign exchange procured for import was not used to complete import formalities (Bill of Entry not submitted and goods warehoused); the contravention is continuing, and because the appellant, after becoming Managing Director, became aware of the default and did not take corrective steps or plead/prove lack of knowledge or due diligence, he is liable under Section 42(1) and the penalty imposed by the adjudicating authority and affirmed by the appellate authorities and High Court was correctly confirmed by the Supreme Court.

Court Disposition

Appeal dismissed

Orders

  • Original adjudicating authority order dated 30.12.2004 and first appellate order dated 13.6.2005 and Calcutta High Court order dated 17.9.2008 affirmed
  • Penalty of Rs.10,00,000 imposed on M/s Zoom Enterprises Ltd. and Rs.10,00,000 imposed on Sri Suborno Bose as imposed by the adjudicating authority confirmed