SHAILENDRA SWARUP versus THE DEPUTY DIRECTOR, ENFORCEMENT DIRECTORATE on 27 July 2020

[2020] 7 S.C.R. 89

SHAILENDRA SWARUP

v.

THE DEPUTY DIRECTOR, ENFORCEMENT DIRECTORATE

(Criminal Appeal No. 2463 of 2014)

JULY 27, 2020

[ASHOK BHUSHAN AND R. SUBHASH REDDY, JJ.]

Foreign Exchange Regulation Act, 1973:

ss.8(3), 8(4), 50, 51 and 68 – Show cause notice for initiationfor proceedings u/s. 51 against Company and its Directors forcontravention of ss. 8(3) r/w 8(4) and 68 – Reply by the Company –Initiation of proceedings – Appellant (one of the Directors) repliedthat he was a part-time, non-executive Director and was notresponsible for the conduct of business of the Company at the relevanttime – Penalty imposed by Enforcement Directorate – Appeal beforeAppellate Tribunal for Foreign Exchange dismissed – High Courtalso dismissed the appeal – Appeal to Supreme Court – Held: Theliability to proceed with for the offence u/s. 68 depends on the roleplayed in the affairs of the Company and not on mere designationor status – For proceeding against Director of a Company forcontravention of provisions of the Act, the necessary ingredient forproceeding shall be that the Director was incharge of and wasresponsible for the conduct of the business of the Company at therelevant time – Penalty was imposed on the appellant-Directorwithout returning a finding that it was he who was liable forcontravention of the provisions of ss. 8(3), 8(4) and 68 – Therefore,the penalty imposed on the appellant is set aside.

Allowing the appeal, the Court

HELD: 1. The High Court committed error in observingthat plea taken by the appellant in its reply dated 29.10.2003 wasafterthought, since, no such plea was taken in reply to the showcause notice dated 19.02.2001. The notice dated 19.02.2001although was addressed to the Company and all its Directors,the reply was given only by the Company Secretary and none ofthe Directors has given any reply. The notice dated 19.02.2001was issued by the Deputy Director, Enforcement Directorate to

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[2020] 7 S.C.R.

Adecide as to whether the adjudication proceedings ascontemplated in Section 51, of Foreign Exchange Regulation Act,1973 (FERA, 1973) should be held against the Directors forcontravention. When the Deputy Director decided to hold theadjudication proceedings under Section 51 reply given in responseto the notice dated 08.10.2003 was statutorily required to beBconsidered under Section 51 and the said reply could not havebeen ignored or knocked down by an erroneous assumption thatit was an afterthought. 29.10.2003 was the date fixed by theadjudicating officer for personal hearing of the Directors. Theappellant had not submitted any reply to show cause notice datedC19.02.2001 which though was addressed to the Company and allDirectors and the reply was sent only by the Company Secretaryon 26.03.2001. The representation dated 29.10.2003 was the firstrepresentation submitted by the appellant before the adjudicatingofficer during course of personal hearing. What is said by a personwho is called for personal hearing even though given in the formDof written representation dated 29.10.2003 required to beconsidered by the adjudicating officer otherwise the personalhearing shall become an empty formality and meaningless,specially when what was said by the appellant in his representationdated 29.10.2003 in no manner contradicted the reply 26.03.2001Esent by the Company Secretary. Thus, the written representationdated 29.10.2003 submitted by appellant required dueconsideration and the High Court erred in discarding it as anafterthought. [Para 16][101-G-H; 102-A-E]

2. The view of the High Court that the affidavit datedF04.07.2003 of the Company Secretary had not been filed eitherbefore the Adjudicating Authority or the Appellate Tribunal norany such plea was taken in the earlier communications is neithercorrect nor based on materials on the record. The adjudicatingofficer in its order dated 31.03.2004 has noted the reply dated29.10.2003 on behalf of the appellant. The reply dated 29.10.2003Ghas been brought on the record of the paper book as AnnexureP-4. In paragraph 10(1) of the reply dated 29.10.2003, the affidavitfiled by the Company Secretary has been relied which was alsoenclosed with the reply as Annexure “C”. Thus, the affidavit ofCompany Secretary dated 04.07.2003 clearly stating that theHappellant who was Director of the erstwhile Company was only a part time Director of the said Company and was never in chargeof the day to day business of the Company was very much on therecord of the adjudicating officer. Thus, the material was broughtby the appellant on the record that he was a part-time, non-executive Director not in charge of the affairs of the Company atthe relevant time, which was erroneously refused to be considered.[Paras 17-20 & 22][102-F; 103-A-B; 104-A-B, D]

3.1 The adjudicating officer has imposed the penalty withoutreturning a finding that it was the appellant who was liable forcontravention of the provisions of Section 8(3), 8(4) and Section68 of the FERA, 1973. No finding has been returned by theAppellate Tribunal that the appellant was not a part-time, non-executive Director and was responsible for the conduct of businessof the Company at the relevant time. The order of the adjudicatingofficer, thus, is unsustainable. The Appellate Tribunal has alsonot considered the plea of the appellant and by making generalobservation that management of the Company is to be handledby the Board of Directors, hence, the appellant being Director isheld guilty. [Paras 25-26][106-F-G]

S.M.S. Pharmaceuticals Ltd. v. Neeta Bhalla andAnother, (2005) 8 SCC 89 : [2005] 3 Suppl. SCR 371 –relied on.

3.2 Section 68 of FERA, 1973 deals with “Offences bycompanies”. Section 68(1) creates a legal fiction, i.e., “shall bedeemed to be guilty”. The legal fiction triggers on fulfilment ofconditions as contained in the section. The words “every personwho, at the time of the contravention was committed, was incharge of, and was responsible to, the company for the conduct ofbusiness” has to be given some meaning and purpose. Theprovision cannot be read to mean that whosoever was a Directorof a company at the relevant time when contravention took place,shall be deemed to be guilty of the contravention. Had thelegislature intended that all the Directors irrespective of theirrole and responsibilities shall be deemed to be guilty ofcontravention, the section could have been worded in differentmanner. When a person is proceeded with for committing anoffence and is to be punished, necessary ingredients of the offenceas required by Section 68 should be present. For proceeding AB

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Aagainst a Director of a company for contravention of provisionsof FERA, 1973, the necessary ingredient for proceeding shall bethat at the time offence was committed, the Director was in chargeof and was responsible to the company for the conduct of thebusiness of the company. The liability to be proceeded with foroffence under Section 68 of FERA, 1973 depends on the roleBone plays in the affairs of the company and not on mere designationor status. [Paras 37-38][113-E-H; 114-D-E]

N. K. Wahi v. Shekhar Singh and others (2007) 9 SCC481 : [2007] 3 SCR 883; National Small IndustriesCorporation Limited v. Harmeet Singh Paintal andCanother (2010) 3 SCC 330 : [2010] 2 SCR 805; PoojaRavinder Devidasani v. State of Maharashtra andAnother (2014) 16 SCC 1 : [2014] 14 SCR 1468;National Small Industries Corporation Limited v.Harmeet Singh Paintal and Another (2010) 3 SCC 330:D[2010] 2 SCR 805 – relied on.

N. Rangachari v. Bharat Sanchar Nigam Ltd. (2007) 5SCC 108 : [2007] 5 SCR 329 – distinguished.

3.3 In FERA, 1973 for imposing a penalty under Section50, the adjudicating officer is required to hold an enquiry afterEgiving the person a reasonable opportunity for making arepresentation in the matter. Even though, FERA, 1973 does notcontemplate filing of a written complaint but in proceedings ascontemplated by Section 51, the person, who has to be proceededwith has to be informed of the contravention for which penaltyFproceedings are initiated. The expression “after giving thatperson a reasonable opportunity for making a representation inthe matter” as occurring in Section 51 itself contemplates duecommunication of the allegations of contravention and unlessallegations contains complete ingredients of offence within themeaning of Section 68, it cannot be said that a reasonableGopportunity for making a representation in the matter has beengiven to the person, who is to be proceeded with. [Para 39][114-F-H; 115-A]

3.4 It is correct that FERA, 1973 does not contemplateany complaint but the Scheme of the Act indicates that a person,H

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who is to be proceeded with, has to be made aware of the necessaryallegations, which may constitute an offence on his part. A personin the commercial world having a transaction with company isentitled to presume that the Directors of the company are incharge of the affairs of the company. But the presumption of aperson in the commercial world is a rebuttable presumption andwhen adjudicating authority proceeds to impose a penalty for acontravention of FERA, 1973, essential ingredients constitutingan offence under the FERA read with Section 68 has to becommunicated to the person proceeded with to enable him tomake effective representation in the matter. [Para 40][115-B-C]

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3.5 An order which was passed on 13.02.2004 by the DeputyDirector in adjudication proceedings although with regard todifferent period, the plea of the appellant that he was only a part-time, non-executive Director and not responsible of the conductof business of the Company was accepted and notice wasdischarged against the appellant. The order dated 13.02.2004although related to different period but has categorically noticedthe status of the appellant as part-time non-executive Director.There being decision of Adjudicating Authority, in the recent past,passed on 13.02.2004, that the appellant was only a part-time non-executive Director of MXL, there has to be some reasons fortaking a contrary view by the adjudicating officer in order dated31.03.2004 with regard to affairs of the same company. [Para42][115-F-H; 116-A]

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4. Therefore, the adjudicating officer has erroneouslyimposed penalty on the appellant for the alleged offence underSection 8(3), 8(4) and 68 of the FERA, 1973 which order waserroneously affirmed both by the Appellate Tribunal and the HighCourt. [Para 43][116-B]

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CaseLawReference

A[2007] 5 SCR 329distinguishedPara 32[2010] 2 SCR 805relied onPara 35

CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No.2463 of 2014.

BFrom the Judgment and Order dated 18.11.2009 of the High Courtof Delhi at New Delhi in Crl. A. No. 575 of 2008.

C.A. Sundaram, Kailash Vasdev, Sr. Advs., Ms. Rohini Musa,Jagjit Singh Chhabra, Saksham Maheshwari, Abhishek Gupta, Advs. forthe Appellant.

CK.M. Nataraj, ASG, Ms. Shirin Khajuria, Ms. Ranjana Narayan,B. Krishna Prasad, Advs. for the Respondent.

The Judgment of the Court was delivered by ASHOK BHUSHAN, J.D1. This appeal has been filed against the judgment of Delhi HighCourt dated 18.11.2009 dismissing the Criminal Appeal filed by theappellant by which appeal the judgment dated 26.03.2008 of the AppellateTribunal for Foreign Exchange in Appeal No.622 of 2004 filed by theappellant was challenged.

E2. Brief facts of the case giving rise to this appeal are:

2.1 Modi Xerox Ltd.(MXL) was a Company registered under theCompanies Act, 1956 in the year 1983. Between the period 12.06.1985-21.11.1985, 20 remittances were made by the Company-MXL throughits banker Standard Chartered Bank. The Reserve Bank of India issuedFa letter stating that despite reminder issued by the Authorised Dealer,MXL had not submitted the Exchange Control copy of the custom billsof Entry/Postal Wrappers as evidence of import of goods into India.Enforcement Directorate wrote to MXL in the year 1991-1993 forsupplying invoices as well as purchase orders. MXL on 09.07.1993provided for four transactions and Chartered Accountant’s CertificatesGfor balance 16 amounts for which MXL’s Bankers were unable to traceold records dating back to 1985. MXL amalgamated and merged intoXerox Modicorp Ltd. (hereinafter referred to as “XMC”) on 10.01.2000.A show cause notice dated 19.02.2001 was issued by the DeputyDirector, Enforcement Directorate to MXL and its Directors, including H

the appellant. The show cause notice required to show cause in writingas to why adjudication proceedings as contemplated in Section 51 ofForeign Exchange Regulation Act, 1973 (hereinafter referred to as“FERA, 1973”) should not be held for contravention. Xerox ModiCorporation Ltd. (successor of MXL) replied the show cause noticedated 19.02.2001 vide its letter dated 26.03.2001. The Directorate ofEnforcement decided to hold proceedings as contemplated in Section 51of the FERA, 1973 read with Section 3 and 4 of Section 49 of FEMAand fixed 22.10.2003 for personal hearing. Notice dated 08.10.2003 wassent to MXL and its Directors. Notice dated 08.10.2003 was replied bythe appellant vide its detailed reply dated 29.10.2003. In the reply theappellant stated that he is a practicing Advocate of the Supreme Courtand was only a part-time, non-executive Director of MXL and he wasnever in the employment of the Company nor had executive role in thefunctions of the Company. It was further stated that the appellant wasnever incharge of nor ever responsible for the conduct of business ofthe Company. Along with the reply an affidavit of the Company Secretarydated 04.07.2003 that the appellant who was the Director of erstwhileCompany-XML was only a part-time, Director of the said Company andnever incharge of day to day business of the Company was also filed.The MXL has also submitted a reply dated 29.10.2003. The DeputyDirector, Enforcement Directorate after hearing the appellant, otherDirectors of the Company passed an order dated 31.03.2004 imposing apenalty of Rs.1,00,000/- on the appellant for contravention of Section8(3) read with 8(4) and Section 68 of FERA, 1973.

2.2 Aggrieved by the order dated 31.03.2004 imposing penalty ofRs.1,00,000/- on the appellant, Appeal No.622 of 2004 was filed by theappellant before the Appellate Tribunal for Foreign Exchange whichappeal came to be dismissed by the Appellate Tribunal on 26.03.2008.Against the order of the Appellate Tribunal dated 26.03.2008, CriminalAppeal No.575 of 2008 was filed by the appellant in Delhi High. TheDelhi High Court by the impugned judgment dated 18.11.2009 hasdismissed the appeal of the appellant, questioning which judgment thisappeal has been filed.

3. The High Court, in Criminal Appeal, during pendency of theappeal has stayed the order of penalty. This Court while issuing noticeon 19.02.2010 in the present appeal had also stayed the order of penaltyimposed on the appellant.

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A4. We have heard Shri C.A. Sundaram, learned senior counselfor the appellant and Shri K.M. Nataraj, learned Additional SolicitorGeneral for the respondent.

5. Shri C.A. Sundaram, learned senior counsel for the appellantsubmits that the High Court dismissed the appeal of the appellant holdingBthat reply dated 29.10.2003 of the appellant taking the plea that he wasonly a part-time Director was only an afterthought. The High Courtfurther held that the affidavit dated 04.07.2003 of the Company Secretaryrelied by the appellant does not appear to have been filed either beforethe Adjudicating Authority or the Appellate Tribunal and no such pleahad been taken in the earlier communications. Shri Sundaram submitsCthat the High Court committed error in dismissing the appeal of theappellant whereas neither there was any material nor any specific caseof the Department that the appellant was incharge of and responsiblefor the conduct of business of the Company. The mere fact of Company-MXL in its reply to the notice dated 19.02.2001 having given the namesDof the 13 persons as Directors of MXL does not amount to stating thatall the Directors were responsible for the conduct of business of theCompany. The appellant could have been prosecuted and punished forthe contravention of the provisions of FERA, 1973 only after returning afinding that it was the appellant who was responsible for the conduct ofbusiness during the relevant period when remittances in question wereEmade by MXL. The Appellate Tribunal without recording any findingthat appellant was incharge of the affairs of the Company held theappellant liable, observing that there is nothing on record to show thatany restriction was placed on the powers of the appellants as Directorsof the Company with reference to subject transactions. The AdjudicatingFAuthority although noticed the detailed reply given by the appellant dated29.10.2003 but without returning any finding that the appellant wasDirector who was responsible for working of MXL at the relevant timeimposed the penalty only relying on the letter of the Company Secretarywhere names of the persons who were in the Board of Directors werementioned.G

6. Shri Sundaram further submits that with regard to a subsequenttransaction, proceedings were initiated against the appellant in respectto transaction of MXL where the plea of the appellant that he was onlya part-time, non-executive Director and had no executive role or functionin the Company was accepted and proceedings were dropped insofar asH

the appellant is concerned by order dated 13.02.2004 which order clearlynoticed the status and role of the appellant.

7. Learned Additional Solicitor General refuting the submissionsof the counsel for the appellant contends that penalty has rightly beenimposed on the appellant. He submits that admittedly the appellant wasDirector during the relevant period which fact was admitted too in thereply given to the show cause notice. The show cause notice was issuedagainst all the Directors including the appellant and no effort has beenmade by the appellant to disprove the allegations made against him.Learned Additional Solicitor General submits that there needs no specificcomplaint in proceedings of FERA, 1973 as opposed to complaint underNegotiable Instruments Act. When the proceedings have been initiatedunder Section 51 of the FERA, 1973, the burden is on the appellant toprove that he had no role to play on behalf of the Company.

8. Learned counsel for the parties have placed reliance on fewdecisions of this Court which shall be referred to while considering thesubmissions of the parties in detail.

9. From the submissions made by the parties and materials onrecords following points arise for determination in this appeal:

(1) Whether the plea taken by the appellant in its reply dated29.10.2003 that he was only a part-time, non-executiveDirector and was never incharge of nor even responsiblefor the conduct of business of the Company at the relevanttime was an afterthought, since, in the reply given by theCompany Secretary dated 26.03.2001 no such plea wastaken?

(2) Whether the appellant has not brought any material on recordeither before the Adjudicating Authority or the AppellateTribunal to prove that he was only a part-time, non-executiveDirector not responsible for the conduct of business of theCompany at the time of commission of the offence?

(3) Whether the Adjudicating Authority, Appellate Tribunal andthe High Court erred in holding contravention of provisionsof Section 8(3), 8(4) and Section 68 of FERA, 1973 by theappellant without their being any material that the appellantwas responsible for the conduct of business of the Company A

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98SUPREME COURT REPORTS

Aat the time of commission of the offence and withoutrecording any specific findings to that effect?

POINT NO.1

10. As noted above, the High Court has rejected the plea of theappellant that he was part-time, non-executive Director not responsibleBfor the conduct of business of the Company at the relevant period on theground that the above plea is an afterthought since in reply given by theCompany Secretary to show cause notice dated 19.02.2001 no suchplea was taken.

11. We may first notice the show cause notice dated 19.02.2001.CThe show cause notice dated 19.02.2001 was given to the MXL and allDirectors of MXL and along with show cause notice Annexure ‘B’ wasa list of Directors of MXL where the name of the appellant was alsoincluded at Serial No.12. It is relevant to notice following portion of theshow cause notice:

D“AND WHEREAS it further appears that S/Shri – As perAnnexure B Proprietor, Partner(s)/Manager/Secretary of the saidcompany/firm has been responsible/supervisor/ incharge of thesaid company/firm for the conduct of business of the company/firm at the relevant time when the aforesaid import was made asEsuch he/she/they has/have rendered himself/herself/themselvesliable also to be proceeded against under Section 50 of the ForeignExchange Regulation Act, 1973 (46 of 1973).

NOW THEREFORE, the said M/s Modi Xerox Ltd. as well asits Directors of the above address are hereby required to showcause in writing (in duplicate) within thirty days from the date ofFreceipt of this Memorandum as to why adjudication proceedingsas contemplated in Section 51 of the Foreign Exchange RegulationAct, 1973 (46 of 1973) should not be held against them for theaforesaid contravention.”

12. The show cause notice, thus, asked the Directors to showGcause as to why adjudication proceedings as contemplated in Section 51of the FERA, 1973 should not be held against them.The reply to the saidnotice was sent only by the Company through Acting Company Secretarydated 26.03.2001. The Deputy Director, Enforcement Directorate afterconsidering the reply to show cause by XMC’s vide letter datedH26.03.2001 decided to hold adjudication proceedings as contemplated in Section 51 of FERA, 1973. Adjudication notice dated 08.10.2003 wasissued by Deputy Director, Enforcement asking the Directors to appearfor personal hearing on 22.10.2003. It is relevant to reproduce the contentsof the notice dated 08.10.2003 which are to the following effect:

“DIRECTORATE OF ENFORCEMENTFOREIGN EXCHANGE MANZMENTNTMINISTRY OF FINANCEDEPARTMENT OF REVENUEGOVERNMENT OF NDIA

HEAD QUARTERS OFFICE,

6TH FLOOR LOK NAYAK BHAWAN,KHAN MARKET NEW DELHI -110 003.

F.NO.T4.2O/DZ/2001/DD(AV)VM/4571 DATE 8/10/2003

From

The Deputy Director of Enforcement

To

M/s Modi Xerox Ltd.Ground Floor, Hemkunt Tower,98 Nehru Place,N. Delhi -19

And its Directors [As per fist attached].

Dear Sir /Madam,

Subject: Adjudication proceedings in respect of Memo No. T-4/20/D2/2001 (SCN.) Dated 19/2/2001

This is to inform you that after considering the cause shown byyou in/as you have failed to reply to the above mentionedmemorandum the Deputy Director of Enforcement is of the opinionthe Adjudication proceeding as contemplated in Section 51 ofFERA, 1973 read with Section 3 & 4 of section 49 of FEMA,1999 should be held against you in accordance with the procedure A

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Alaid shown in Rules of the Adjudication Proceedings & AppealRules, 1974 and has accordingly fixed this case for personalhearing before him on 22 Oct. 2003 [22[nd] OCT. 2003] at 12:30pm in the office of this Directorate at the above mentioned address.

Now, therefore, you are hereby given an opportunity to presentByourself either personally or through your lawyer or otherauthorised representative before the Deputy Director ofEnforcement for personal hearing on the aforesaid date, time andplace.

You may please note that in case you fail to appear before theCAdjudication Authority on the aforesaid date he may proceed withthe enquiry in your absence and pass Adjudication Order on thebasis of material and evidence available to him.

Your attention in this connection is invited to the provisions toRule 3 of the Adjudication Proceedings & Appeal Rules, 1974Dread with section 3 & 4 of section 49 of FEMA ,1999 whereby incase it is decided to hold Adjudication Proceedings personal hearingof the case could be waived at your request. In case you prefer towaive personal hearing you may intimate accordingly so that thecase may be decided without your personal attendance on thebasis of available evidence.E

Yours faithfully,

Sd/-

For Deputy Director”

13. We may also notice the provisions of Section 51 of FERA,1973, which is to the following effect:-F

“Section 51. Power to adjudicate.—For the purpose of adjudgingunder section 50 whether any person has committed acontravention of any of the provisions of this Act (other than thosereferred to in that section) or of any rule, direction or order madethereunder, the adjudicating officer shall hold an inquiry in theGprescribed manner after giving that person a reasonableopportunity for making a representation in the matter and if, onsuch inquiry, he is satisfied that the person has committed thecontravention, he may impose such penalty as he thinks fit inaccordance with the provisions of that section.”

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14. The provisions of Section 51 as noted above oblige theadjudicating officer to hold an inquiry in the prescribed manner aftergiving that person a reasonable opportunity for making a representationin the matter.

15. When notice dated 08.10.2003 was given for adjudicationproceedings it was obligatory for the adjudicating officer to giveopportunity for making representation. In response to the notice dated08.10.2003 the appellant has submitted a detailed reply dated 29.10.2003.In his reply the appellant apart from other facts stated following:

“1. The undersigned is a practicing Advocate of the Hon’bleSupreme Court of India and was only a part-time, non-executiveDirector of erstwhile Modi Xerox Limited and was never in itsemployment nor ever had any executive role or function in thesaid Company. Further the undersigned was never in charge ofnor ever responsible for the conduct of the business of the CompanyMXL nor did the Noticee ever had any executive role or functionin the company.

2. The undersigned Noticee had not at any stage been involved inany discussions or decisions relating to the import by the saidCompany and never issued any instructions to any banker or anyother functionary of MXL to get any remittance affected out ofIndia for any import.

3. The Notices was neither in charge of nor ever responsible forconduct of the day to day business of MXL.”

16. The representation dated 29.10.2003 was, thus, firstrepresentation submitted by the appellant in response to adjudicationnotice and the plea taken by the appellant that he was only a part-time,non-executive Director of erstwhile MXL and was never incharge ofnor even responsible for the conduct of business of the Company wasthe plea taken first time by the appellant and could not have been termedeither as afterthought or denied consideration. The High Court committederror in observing that plea taken by the appellant in its reply dated29.10.2003 was afterthought, since, no such plea was taken in reply tothe show cause notice dated 19.02.2001. As noted above the noticedated 19.02.2001 although was addressed to the Company and all itsDirectors, the reply was given only by the Company Secretary and noneof the Directors has given any reply. The notice dated 19.02.2001 was A

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Aissued by the Deputy Director, Enforcement Directorate to decide as towhether the adjudication proceedings as contemplated in Section 51should be held against the Directors for contravention. When the DeputyDirector decided to hold the adjudication proceedings under Section 51reply given in response to the notice dated 08.10.2003 was statutorilyrequired to be considered under Section 51 and the said reply could notBhave been ignored or knocked down by an erroneous assumption that itwas an afterthought as has been done by the High Court. 29.10.2003was the date fixed by the adjudicating officer for personal hearing of theDirectors. The appellant had not submitted any reply to show causenotice dated 19.02.2001 which though was addressed to the CompanyCand all Directors and the reply was sent only by the Company Secretaryon 26.03.2001. The representation dated 29.10.2003 was the firstrepresentation submitted by the appellant before the adjudicating officerduring course of personal hearing. What is said by a person who iscalled for personal hearing even though given in the form of writtenrepresentation dated 29.10.2003 required to be considered by theDadjudicating officer otherwise the personal hearing shall become an emptyformality and meaningless, specially when what was said by the appellantin his representation dated 29.10.2003 in no manner contradicted thereply 26.03.2001 sent by the Company Secretary. We, thus, are of theconsidered opinion that written representation dated 29.10.2003 submittedEby appellant required due consideration and the High Court erred indiscarding it as an afterthought.

POINT NO.2

17. We may further note that the High Court in its judgment hasobserved that affidavit relied upon by the appellant dated 04.07.2003 ofFthe Company Secretary had not been filed either before the AdjudicatingAuthority or the Appellate Tribunal nor any such plea was taken in theearlier communications. This has been observed in paragraph 17 of theimpugned judgment, which is to the following effect:

“17. It was only as an afterthought and later on that the petitionerGin his subsequent reply dated 29.10.2003 took up a plea that hewas only a part time director and relied upon an affidavit dated4.7.2003 of the Company Secretary Mukesh Dugar which evenotherwise does not appear to have been filed either before theAdjudicating Authority or the Appellate Tribunal. No such pleaHhad been taken in any of the earlier communications.”

18. The above view of the High Court is neither correct nor basedon materials on the record.

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19. The adjudicating officer in its order dated 31.03.2004 has notedthe reply dated 29.10.2003 on behalf of the appellant. The reply dated29.10.2003 has been brought on the record of the paper book as AnnexureP-4. In paragraph 10(1) of the reply dated 29.10.2003, the affidavit filedby the Company Secretary has been relied which was also enclosedwith the reply as Annexure “C”. Affidavit of the Company Secretarydated 04.07.2003 which was enclosed with the reply was to the followingeffect:

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“AFFIDAVIT

I, Mukesh Dugar son of Sh. S.R. Dugar and presently theCompany Secretary & Head – Legal of Xerox Modicorp Limitedhaving its registered office at 109, Shivalik Apartments, Sector 3,Noida, Distt. Gautam Budh Nagar, Uttar Pradesh do herebysolemnly affirm and state as follows:

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1. That Modi Xerox Limited has since been merged into XeroxModicorp Limited vide orders dated 10.01.2000 and 21.01.2000of Hon’ble Allahabad High Court.

2. That Mr. Shailendra Swarup, who was a Director of theEerstwhile Modi Xerox Limited was only a part time Directorof the said Company and was never in charge of the day today business of the Company.

Place Gurgaon Sd/-Date 4/7/2003 DEPONENT

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VERIFICATION

Verified that the contents of this affidavit are true to the best ofGmy knowledge and no part of it is false and nothing material hasbeen concealed therein.

Signed and verified at Gurgaon on this 4[th] day of July, 2003.

DEPONENT”

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A20. Thus, the affidavit of Company Secretary dated 04.07.2003clearly stating that the appellant who was Director of the erstwhile MXLwas only a part time Director of the said Company and was never incharge of the day to day business of the Company was very much onthe record of the adjudicating officer and the High Court erred in holdingBthat the said material was not filed before the Adjudging Authority or theAppellate Tribunal.

21. The High Court, thus, discarded the plea of the appellant thathe was part-time, non-executive Director as afterthought and did notconsider the same on the ground that the affidavit dated 04.07.2003Crelied by the appellant was not filed which, as noted above, is not correct.There was nothing on record brought on behalf of the Department thatthe above plea of the appellant was incorrect and it was the appellantwho was responsible for the conduct of business of the Company at therelevant time.

22. We, thus, are of the view that the material was brought by theappellant on the record that he was a part-time, non-executive Directornot incharge of the affairs of the Company at the relevant time, whichwas erroneously refused to be considered.

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POINT NO.3

E23. The Adjudicating Authority has in its order dated 31.03.2004noted the reply dated 29.10.2003 filed on behalf of the appellant andAdjudicating Authority has extracted several paragraphs of the reply ofthe appellant. Paragraph 10 of the reply has been extensively quoted bythe Adjudicating Authority specially sub-paragraph (1), (2) and (3) whichare to the following effect:F

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“10 It is prayed that the proceedings initiated may kindly be droppedon the following amongst other main grounds, which are set outhereinafter without prejudice to one another and are in addition tothe facts and submission set forth hereinabove G(1) That the Notice was a decorative part time non-executiveDirector and the Board Meetings attended by him have onlybeen in his capacity as a part-time non-executive Directorand not in any other capacity. The Noticee was never in theemployment of the company and never ever had nay executiverole or function in the Company. A copy of the Affidavit filed H

by the noticee with his reply to Show Cause Notice No.T-4/337/DZ/2002 dated 28.05.2002 of the Company Secretary ofXMC at the time to its swearing confirming that the Noticeewas only a part-time Director of MXL and was never in chargeof the day to day business of MXL is enclosed herewith andmarked as Annexure - ‘C’. This Notice has been neverengaged in day to day conduct of the business of MXL. Hehas never entered into any import agreement. He has neverissued any instructions to any person or the bank for causingany remittance abroad and as such he is not responsible forliable at all in any manner.

(2) It is respectfully submitted that the documents enclosed withMXL’s reply of 04.12.1991, 25.12.1991, 25.12.1991 and09.07.1993 and XMC’s reply dated 26.03.2001 will establishthat goods have been imported against the remittancesmentioned in the Annexure and they had been duly reportedto Reserve Bank of India and there is no evidence of goodsnot having been imported.

(3) This Noticee was never in charge of the day to day businessof MXL and had no knowledge of the transactions in respectof which the above referred Show Cause Notice dated08.10.2003 had been issued much less any intent or knowledgeof alleged contraventions as set forth therein. The certificatesof compliances given by MXL management to the Boardprove and establish that the contraventions alleged in the abovereferred Notice and the subject Memorandum, in any viewof the matter if occurred, were without the knowledge andhad nothing to do with the transactions in question, the questionof this Noticee committing consciously or deliberately anycontravention of the FERA or any other law or regulationsdoes not arise and no penalty can in law be imposed on thisNoticee. The adjudication proceedings are otherwise notmaintainable in law.”

24. After noticing the above plea of the appellant, the AdjudicatingAuthority has noticed that letter dated 26.03.2001 of the CompanySecretary where he has given the names of 13 Directors and after noticingthe aforesaid 13 Directors the Adjudicating Authority has recorded itsconclusion in following words:

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A“I have also gone through the replies received from other directorsand found that they were not responsible for day to day activitiesof the company and were not the Directors during the relevantperiod which was between 12.06.1985 to 21.11.1985 and theywere the nominees of IFCI, GIC, ICICI, UTI and IDBIrespectively, hence, I drop the charges against the Directors exceptBS/Sh. Bhupinder Kumar Modi, Umesh Kumar Modi, John RodgerMiligan, James Campbell White and Shailendra Swarup who wereDirectors at relevant time and responsible for working of the M/s Modi Xerox Ltd.,I hereby find them guilty and impose a penaltyof Rs.1,00,000/- (Rupees One Lakh only) each on S/Sh. BhupinderCKumar Modi, Umesh Kumar Modi, John Rodger Miligan, JamesCampbell White and Shailendra Swarup and Rs.5,00,000/- (RupeesFive Lakhs only) on M/s Modi Xerox Ltd. for contravention ofSection 8(3) read with Section 8(4) and Section 68 of FERA,1973, I also find the other directors were not joined the companyat relevant time when the transaction had taken place and wereDnot responsible for the conduct of the company, hence I drop thecharges against S/Sh. Laurence Lyndon Haddon, StephenLawrence Tiemey, Bernard Fournier, R.S. Lodha, R.P. Goel, JanWilliams Van Erde, Chaman Lal Turki Dhar, Ramesh C. Vash,S.K. Jain, K.P. Narasimhan, Sunil Mitra, Sundershan Lal, R.K.EMahajan, C.G. Parekh, Kari Kumar and Usha Ranjan Saha.”25. There is no consideration of pleas of the appellant as has beenextracted by the adjudicating officer himself as noted above specially inparagraph 10(1), 10(2) and 10(3) of the reply. The adjudicating officerhas not even held that the pleas taken by the appellant were untenable.FThe adjudicating officer, thus, has imposed the penalty without returninga finding that it was the appellant who was liable for contravention ofthe provisions of Section 8(3), 8(4) and Section 68 of the FERA, 1973.The order of the adjudicating officer, thus, is unsustainable on the aboveground also.

G26. The Appellate Tribunal has also not considered the above pleaof the appellant and by making general observation that management ofthe Company is to be handled by the Board of Directors, hence, theappellant being Director is held guilty. No finding has been returned bythe Appellate Tribunal that the appellant was not a part-time, non-executive Director and was responsible for the conduct of business ofHthe Company at the relevant time.

27. We may also notice few judgments of this Court some ofwhich have also been referred to by the learned counsel for the parties.A three-Judge Bench judgment in S.M.S. Pharmaceuticals Ltd. Vs.Neeta Bhalla and another, (2005) 8 SCC 89, had occasion to considerthe provisions of Section 141 of the Negotiable Instruments Act, 1981which provisions are parimateriato Section 68 of the FERA, 1973.Section 68 of the FERA, 1973 deals with Offences by Companies and isto the following effect:

“68. Offences by companies.—

(1) Where a person committing a contravention of any of theprovisions of this Act or of any rule, direction or order madethereunder is a company, every person who, at the time of thecontravention was committed, was in charge of, and wasresponsible to, the company for the conduct of business of thecompany as well as the company, shall be deemed to be guilty ofthe contravention and shall be liable to be proceeded against andpunished accordingly: Provided that nothing contained in this sub-section shall render any such person liable to punishment if heproves that the contravention took place without his knowledgeor that he exercised all due diligence to prevent such contravention.

(2) Notwithstanding anything contained in sub-section (1), wherea contravention of any of the provisions of this Act or of any rule,direction or order made thereunder has been committed by acompany and it is proved that the contravention has taken placewith the consent or connivance of, or is attributable to any neglecton the part of, any director, manager, secretary or other officer ofthe company, such director, manager, secretary or other officershall also be deemed to be guilty of the contravention and shall beliable to be proceeded against and punished accordingly.

Explanation.—For the purposes of this section—

(I) “company” means any body corporate and includes a firm orother association of individuals; and

(ii) “director”, in relation to a firm, means a partner in the firm.”

28. In the Negotiable Instruments Act, 1881 initially there was noprovision regarding offences by Companies and by Act 66 of 1988 Section141 was inserted in the Negotiable Instruments Act, 1881 which provisionis to the following effect:

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“Section 141. Offences by companies.—(1) If theperson committing an offence under section 138 is a company,every person who, at the time the offence was committed, was incharge of, and was responsible to, the company for the conductof the business of the company, as well as the company, shall bedeemed to be guilty of the offence and shall be liable to beproceeded against and punished accordingly:

Provided that nothing contained in this sub-section shallrender any person liable to punishment if he proves that the offencewas committed without his knowledge, or that he had exercisedall due diligence to prevent the commission of such offence:

Provided further that where a person is nominated as aDirector of a company by virtue of his holding any office oremployment in the Central Government or State Government or afinancial corporation owned or controlled by the CentralGovernment or the State Government, as the case may be, heshall not be liable for prosecution under this Chapter.

(2) Notwithstanding anything contained in sub-section (1), whereany offence under this Act has been committed by a companyand it is proved that the offence has been committed with theconsent or connivance of, or is attributable to, any neglect on thepart of, any director, manager, secretary or other officer of thecompany, such director, manager, secretary or other officer shallalso be deemed to be guilty of that offence and shall be liable tobe proceeded against and punished accordingly.

Explanation.—For the purposes of this section, —

(a) “company” means anybody corporate and includes afirm or other association of individuals; and (b) “director”, in relation to a firm, means a partner in thefirm.”

29. A bare reading of Section 141 of Negotiable Instruments Act,1881 indicates that sub-section (1) and sub-section (2) of Section 141are parimateriato Section 68 of FERA, 1973 which was already in thestatute. This Court in S.M.S. Pharmaceuticals (supra) had occasionto consider the requirements of Section 141. In paragraph 4 this Courtlays down following:

“4.....The normal rule in the cases involving criminal liabilityis against vicarious liability, that is, no one is to be held criminallyliable for an act of another. This normal rule is, however, subjectto exception on account of specific provision being made in statutesextending liability to others. Section 141 of the Act is an instanceof specific provision which in case an offence under Section 138is committed by a Company, extends criminal liability for dishonourof cheque to officers of the Company. Section 141 containsconditions which have to be satisfied before the liability can beextended to officers of a company. Since the provision createscriminal liability, the conditions have to be strictly complied with.The conditions are intended to ensure that a person who is soughtto be made vicariously liable for an offence of which the principalaccused is the Company, had a role to play in relation to theincriminating act and further that such a person should know whatis attributed to him to make him liable. In other words, personswho had nothing to do with the matter need not be roped in. Acompany being a juristic person, all its deeds and functions areresult of acts of others. Therefore, officers of a Company whoare responsible for acts done in the name of the Company aresought to be made personally liable for acts which result in criminalaction being taken against the Company. It makes every personwho. at the time the offence was committed, was incharge of andwas responsible to the Company for the conduct of business ofthe Company, the Company, liable for the offence. The proviso tothe sub-section contains an escape route for persons who areable to prove that the offence was committed without theirknowledge or that they had exercised all due diligence to preventcommission of the offence.’’

30. This Court held that the criminal liability arises from beingincharge of and responsible for the conduct of the Company at the relevanttime. Elaborating the requirement for a person to be made liable underSection 141 this Court laid down following in paragraphs 10 and 12:

“10. While analysing Section 141 of the Act, it will be seen that itoperates in cases where an offence under Section 138 is committedby a company. The key words which occur in the Section are“every person”. These are general words and take every personconnected with a company within their sweep. Therefore, these ABC

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words have been rightly qualified by use of the words “ who, atthe time the offence was committed, was in charge of and wasresponsible to the company for the conduct of the business of thecompany, as well as the company, shall be deemed to be guilty ofthe offence etc.” What is required is that the persons who aresought to be made criminally liable under Section 141 should be atthe time the offence was committed, in charge of and responsibleto the company for the conduct of the business of the company.Every person connected with the company shall not fall withinthe ambit of the provision. It is only those persons who were incharge of and responsible for conduct of business of the companyat the time of commission of an offence, who will be liable forcriminal action. It follows from this that if a director of a Companywho was not in charge of and was not responsible for the conductof the business of the company at the relevant time, will not beliable under the provision. The liability arises from being in chargeof and responsible for conduct of business of the company at therelevant time when the offence was committed and not on thebasis of merely holding a designation or office in a company.Conversely, a person not holding any office or designation in aCompany may be liable if he satisfies the main requirement ofbeing in charge of and responsible for conduct of business of aCompany at the relevant time. Liability depends on the role oneplays in the affairs of a Company and not on designation or status.If being a Director or Manager or Secretary was enough to castcriminal liability, the Section would have said so. Instead of “everyperson” the section would have said “every Director, Manager orSecretary in a Company is liable”....etc. The legislature is awarethat it is a case of criminal liability which means seriousconsequences so far as the person sought to be made liable isconcerned. Therefore, only persons who can be said to beconnected with the commission of a crime at the relevant timehave been subjected to action.

12. The conclusion is inevitable that the liability arises on accountof conduct, act or omission on the part of a person and not merelyon account of holding an office or a position in a company.Therefore, in order to bring a case within Section 141 of the Actthe complaint must disclose the necessary facts which make aperson liable.’’

31. The ratio of the above judgment has been reiterated by thisCourt in N.K. Wahi vs. Shekhar Singh and others, (2007) 9 SCC481, National Small Industries Corporation Limited vs. HarmeetSingh Paintal and another, (2010) 3 SCC 330 and Pooja RavinderDevidasani vs. State of Maharashtra and another, (2014) 16 SCC1.

32. Learned Additional Solicitor General placed reliance on thejudgment of this Court reported in N. Rangachari vs. Bharat SancharNigam Ltd., (2007) 5 SCC 108. This Court in Rangachari was againconsidering the provisions of Section 141 of the Negotiable InstrumentsAct, 1881. Learned Additional Solicitor General relied on paragraphs 17to 22. In N. Rangachari this Court has noticed the earlier three-Judgejudgment in S.M.S. Pharmaceuticals Ltd.(supra) and clearly held thatthe said judgment is binding. In paragraph 20 of N. Rangachari, thisCourt laid down following:

“20. In other words, the law laid down by this Court is thatfor making a Director of a Company liable for the offencescommitted by the Company Under Section 141 of the N.I. Act,there must be specific averments against the Director showing asto how and in what manner the Director was responsible for theconduct of the business of the Company.”

33. Thus, what was held in S.M.S. Pharmaceuticals Ltd.(supra)has been reiterated by N. Rangachari. We may also refer to paragraph23 of the N. Rangachari judgment where following has been laid down:

“23. In the light of the ratio in S.M.S. Pharmaceuticals Ltd. (2005)8 SCC 89, what is to be looked into is whether in the complaint, inaddition to asserting that the appellant and another are the Directorsof the company, it is further alleged that they are incharge of andresponsible to the company for the conduct of the business of thecompany. We find that such an allegation is clearly made in thecomplaint which we have quoted above. Learned Senior Counselfor the appellant argued that in Saroj Kumar Poddar case (2007)3 SCC 693, this Court had found the complaint unsustainable onlyfor the reason that there was no specific averment that at thetime of issuance of the cheque that was dishonoured, the personsnamed in the complaint were incharge of the affairs of thecompany. With great respect, we see no warrant for assumingsuch a position in the context of the binding ratio in S.M.S.

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APharmaceuticals Ltd. and in view of the position of the Directorsin a company as explained above.”

34. In the facts of the above case this Court held that allegationswere clearly made out in the complaint. Judgment of this Court inN. Rangachari, thus, does not help the respondent nor it, in any manner,Bdilute the ratio of three-Bench judgment in S.M.S. PharmaceuticalsLtd. (supra).

35. We may notice one more judgment of this Court, NationalSmall Industries Corporation Limited Vs. Harmeet Singh Paintaland Another, (2010) 3 SCC 330, interpreting Section 141 of theCNegotiable Instruments Act, 1881. After extracting Section 141 of theNegotiable Instruments Act dealing with offences by companies, thisCourt in paragraph 12 and 13 laid down:- “12. It is very clear from the above provision that what is requiredis that the persons who are sought to be made vicariously liableDfor a criminal offence under Section 141 should be, at the time theoffence was committed, was in-charge of, and was responsibleto the company for the conduct of the business of the company.Every person connected with the company shall not fall withinthe ambit of the provision. Only those persons who were in-chargeof and responsible for the conduct of the business of the companyEat the time of commission of an offence will be liable for criminalaction. It follows from the fact that if a Director of a Companywho was not in-charge of and was not responsible for the conductof the business of the company at the relevant time, will not beliable for a criminal offence under the provisions. The liabilityFarises from being in-charge of and responsible for the conduct ofthe business of the company at the relevant time when the offencewas committed and not on the basis of merely holding a designationor office in a company.

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13. Section 141 is a penal provision creating vicarious liability, andGwhich, as per settled law, must be strictly construed. It is therefore,not sufficient to make a bald cursory statement in a complaintthat the Director (arrayed as an accused) is in charge of andresponsible to the company for the conduct of the business of thecompany without anything more as to the role of the Director.But the complaint should spell out as to how and in what mannerHRespondent No. 1 was in-charge of or was responsible to the accused company for the conduct of its business. This is inconsonance with strict interpretation of penal statutes, especially,where such statutes create vicarious liability.”

36. In the above case, this Court held that Directors can beprosecuted only if they were in-charge and responsible for the conductof the business of the company. In paragraph 36, following has been laiddown:- “36. Section 291 of the Companies Act provides that “291. General powers of Board.—(1) Subject to the provisionsof that Act, the Board of Directors of a company shall be entitledto exercise all such powers, and to do all such acts and things, asthe company is authorized to exercise and do.

A company, though a legal entity, can act only through its Boardof Directors. The settled position is that a Managing Director isprima facie in-charge of and responsible for the company’s businessand affairs and can be prosecuted for offences by the company.But insofar as other Directors are concerned, they can beprosecuted only if they were in-charge of and responsible for theconduct of the business of the company.”

37. Section 68 of FERA, 1973 deals with “Offences bycompanies”. Section 68(1) provides that “……………every person who,at the time of the contravention was committed, was in charge of, andwas responsible to, the company for the conduct of business of thecompany as well as the company, shall be deemed to be guilty of thecontravention…………..” Section 68(1) creates a legal fiction, i.e., “shallbe deemed to be guilty”. The legal fiction triggers on fulfilment ofconditions as contained in the section. The words “every person who, atthe time of the contravention was committed, was in charge of, and wasresponsible to, the company for the conduct of business” has to be givensome meaning and purpose. The provision cannot be read to mean thatwhosoever was a Director of a company at the relevant time whencontravention took place, shall be deemed to be guilty of the contravention.Had the legislature intended that all the Directors irrespective of theirrole and responsibilities shall be deemed to be guilty of contravention,the section could have been worded in different manner. When a personis proceeded with for committing an offence and is to be punished,necessary ingredients of the offence as required by Section 68 shouldbe present.

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A38. We may notice that Section 141 of the Negotiable InstrumentsAct, which was inserted in Negotiable Instruments Act by amendmentin the year 1988 contains the same conditions for a person to be proceededwith and punished for offence as contained in Section 68 of FERA,1973. Section 141(1) of Negotiable Instruments Act uses the sameexpression “every person, who, at the time the offence was committed,Bwas in charge of and was responsible to the company for the conduct ofthe business of the company, as well as the company, shall be deemed tobe guilty of the offence”. Section 68 of FERA, 1973 as well as Section141 of the Negotiable Instruments Act deals with the offences by thecompanies in the same manner. The ratio of the judgments of this CourtCon Section 141 of Negotiable Instruments Act as noted above are alsoclearly relevant while interpreting Section 68 of FERA Act. We, thus,hold that for proceeding against a Director of a company for contraventionof provisions of FERA, 1973, the necessary ingredient for proceedingshall be that at the time offence was committed, the Director was incharge of and was responsible to the company for the conduct of theDbusiness of the company. The liability to be proceeded with for offenceunder Section 68 of FERA, 1973 depends on the role one plays in theaffairs of the company and not on mere designation or status. This Courtin S.M.S. Pharmaceuticals Ltd. (supra) while elaborating the ambit and scope of Section 141 of Negotiable Instruments Act has already laidEdown above in paragraph 10 of the judgment as extracted above.

39. It is true that with regard to any offence punishable underSection 138 of Negotiable Instruments Act with respect to offences bycompanies, a complaint in writing has to be filed as required by Section142 of the Negotiable Instruments Act. A complaint as contemplated forFoffence under Section 138 needs to be necessarily contain all allegationsconstituting offence. In FERA, 1973 for imposing a penalty under Section50, the adjudicating officer is required to hold an enquiry after giving theperson a reasonable opportunity for making a representation in the matter.Even though, FERA, 1973 does not contemplate filing of a writtencomplaint but in proceedings as contemplated by Section 51, the person,Gwho has to be proceeded with has to be informed of the contraventionfor which penalty proceedings are initiated. The expression “after givingthat person a reasonable opportunity for making a representationin the matter” as occurring in Section 51 itself contemplate duecommunication of the allegations of contravention and unless allegationsHcontains complete ingredients of offence within the meaning of Section 68, it cannot be said that a reasonable opportunity for making arepresentation in the matter has been given to the person, who is to beproceeded with.

40. Learned ASG is right in his submission that FERA, 1973 doesnot contemplate any complaint but the Scheme of the Act indicate that aperson, who is to be proceeded with has to be made aware of thenecessary allegations, which may constitute an offence on his part. ThisCourt in N. Rangachari (supra) has observed that a person in thecommercial world having a transaction with company is entitled topresume that the Directors of the company are in charge of the affairsof the company. The presumption of a person in the commercial world isa rebuttable presumption and when adjudicating authority proceeds toimpose a penalty for a contravention of FERA, 1973, essential ingredientsconstituting an offence under the FERA read with Section 68 has to becommunicated to the person proceeded with to enable him to makeeffective representation in the matter.

41. Learned Additional Solicitor General also submitted that allthe three Courts have held and found contravention proved by theappellant, this Court may not interfere with such conclusion. We havealready noticed above that the plea of the appellant that he was part-time, non-executive Director not incharge of the conduct of business ofthe Company at the relevant time was erroneously discarded by theauthorities and the High Court and there is no finding by any of theauthorities after considering the material that it was the appellant whowas responsible for the conduct of business of the Company at the relevanttime. Thus, present is a case where the liability has been fastened on theappellant without there being necessary basis for any such conclusion.

42. It is also relevant to notice that an order which was passed on13.02.2004 by the Deputy Director in adjudication proceedings althoughwith regard to different period, the plea of the appellant that he was onlya part-time, non-executive Director and not responsible of the conductof business of the Company was accepted and notice was dischargedagainst the appellant. The order dated 13.02.2004 although related todifferent period but has categorically noticed the status of the appellantas part-time non-executive Director. There being decision of AdjudicatingAuthority, in the recent past, passed on 13.02.2004, that the appellantwas only a part-time non-executive Director of MXL, there has to besome reasons for taking acontrary view by the adjudicating officer in AB

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43. In view of the foregoing discussions, we are of the view thatthe adjudicating officer has erroneously imposed penalty on the appellantfor the alleged offence under Section 8(3), 8(4) and 68 of the FERA,B1973 which order was erroneously affirmed both by the Appellate Tribunaland the High Court.

44. In view of the aforesaid, this appeal deserves to be allowed,the judgments of the High Court as well as those of the adjudicatingofficer and the Appellate Tribunal are set aside. The appeal is allowedCand the penalty imposed on the appellant is set aside.

Kalpana K. Tripathy

Appeal allowed.

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